WASHINGTON (AP) — The pace of consumer spending stalled in June, and personal incomes failed to increase, further evidence that the economy slowed significantly in the spring. þþThe Commerce Department said Tuesday that personal spending was unchanged in June, the third straight month of lackluster consumer demand. Incomes were flat as well, the weakest showing in nine months. þþThe lack of growth for spending and incomes shows the economy ended the second quarter on a weak note. Many analysts believe growth will slow further in the second half of the year as high unemployment, shaky consumer confidence and renewed troubles in housing weigh on the year-old economic recovery. þþAmericans appear to be preparing for tough times. The personal savings rate rose to 6.4 percent of after-tax incomes in June, the highest reading in nearly a year. The savings rate is now about three times the 2.1 percent average for all of 2007, before the recession began. þþConsumer spending is closely monitored because it accounts for 70 percent of total economic activity. þþThe government reported last week that the overall economy, as measured by the gross domestic product, slowed to an annual growth rate of just 2.4 percent in the April-to-June quarter. That was down from 3.7 percent growth in the first three months of the year and a 5-percent spurt in activity in the fourth quarter of last year. þþThe slowdown reflected the decline in consumer spending, which rose at an annual rate of 1.6 percent in the second quarter compared with 1.9 percent in the first. þþEconomists are worried that the financial troubles weighing on households could cause spending to ebb even more in the second half of the year. The subpar economic growth, just about half the pace normally seen coming out of a deep recession, has made little headway in reducing the 9.5 percent unemployment rate. þþThe zero reading on income growth was weaker than the 0.2-percent increase economists had expected. It followed a 0.3-percent rise in May and was the poorest showing since incomes were also flat in September. Part of the weakness in June reflected a decline in the number of temporary census workers, which subtracted $3.4 billion from federal payrolls at an annual rate. A spurt in census hiring in May had boosted government payrolls. þþThe zero reading on consumer spending was also slightly weaker than economists had forecast. It followed a small 0.1-percent rise in May and a 0.1-percent decline in April.þ
Source: NY Times
