Personal spending growth eases

U.S. personal spending rose at its slowest rate in nine months in June while inflation moderated, but consumers’ mood brightened considerably in early July, data showed Tuesday.

Personal spending rose 0.1% in June after posting 0.6% gains in both April and May, despite a rise in income, according to a Commerce Department report that suggested falling home prices and high gasoline costs were pinching consumers.

That was well below Wall Street economists’ forecasts and was the weakest since September, when spending declined.

But the report also contained positive news about inflation risks. It showed a closely watched inflation indicator rising over the last 12 months at its slowest rate in three years.

Wells Fargo Bank said the welter of data did nothing to change its view that the U.S. economy would grow in a moderate 2.5% to 2.7% range over the next few quarters.

The core personal consumption expenditures price index, which excludes food and energy, rose 0.1% in June and 1.9% from a year earlier, the smallest year-over-year increase since March 2004. The overall price index rose 0.1% in June and 2.3% from a year earlier.

Incomes grew in June by 0.4%, matching May’s increase, with wages and salaries advancing 0.5%.

A report from the Conference Board showed consumer confidence at a six-year high of 112.6 in July -- the highest level since August 2001 and above an upwardly revised 105.3 in June.

The Labor Department said second-quarter employment costs had gained 0.9%, slightly faster than the first quarter’s 0.8% rise as benefits climbed.

Another sign of the problems facing the housing industry came in a Commerce Department report showing construction spending fell 0.3% in June as more commercial building failed to offset drops in home building.