Consumer spending remains strong despite slower economic growth
Consumer spending remained strong in June, increasing 0.4% as incomes continued a slow but steady increase, the Commerce Department said Tuesday.
Last month’s spending increase matched May’s, as did the 0.2% growth in personal incomes.
With spending outpacing incomes, Americans saved less in June. The percentage of disposable income saved decreased to 5.3%, the fourth-straight monthly decline.
June’s figure was part of a strong quarter for consumer purchases. In figures released last week, spending increased from April through June at a 4.2% annual rate, the best since 2014.
Consumer spending increased at just a 1.6% annual rate in the first quarter of the year amid concerns about global economic growth that roiled financial markets.
But increased spending by Americans wasn’t enough to offset the first quarterly decline in business inventories since 2011. That led the economy to expand at an anemic 1.2% annual rate in the first quarter, half what analysts had forecast.
The annual inflation rate held steady last month.
The price index for personal consumption expenditures, the Federal Reserve’s preferred inflation gauge, increased 0.9% for the 12 months ended June 30. That was the same as for the 12-month period that ended May 31.
The core inflation rate, which excludes volatile food and energy prices, was 1.6% for the 12 months ended June 30. That also was the same rate as for the 12-month period that ended May 31.
The Fed wants to see annual inflation at 2% and is watching the measure closely as it decides when to enact another small increase in its key short-term interest rate.
Follow @JimPuzzanghera on Twitter
