Growth in consumer spending, personal income slows in July
WASHINGTON -- Consumers opened their wallets less last month as their income growth slowed, the government said Friday, raising doubts about a significant pickup in the economic recovery in the second half of the year.
Consumer spending rose 0.1% in July after a upwardly revised 0.6% increase the previous month, the Commerce Department said. Personal income was up 0.1% as well, compared with a 0.3% rise in June.
Analysts had expected consumer spending to increase by 0.3% in July.
The figure was dragged down by a 0.2% decline in purchases of long-lasting durable goods, such as automobiles, appliances and computers, from the previous month, the Commerce Department said. It was the first drop in that category since March.
Purchases of services were flat. Purchases of nondurable goods, such as food and clothing, rose 0.9% in July after a 1.2% increase the previous month.
Consumers saved money at the same 4.4% rate in July as they did the previous month, but the reduction in the growth of spending helped keep inflation down.
Prices were up 0.1% in July compared with a 0.4% increase the previous month. Excluding volatile food and energy costs, prices also were up 0.1% in July after a 0.2% rise in June.
The figures put the inflation rate over the previous 12 months at 1.4%. That was up from 1.3% in June but still below the Federal Reserve’s target of 2% annual price growth.
Fed policymakers are looking for signs that economic growth is improving in the second half of the year as they consider reducing their stimulus efforts as soon as September.
But some recent economic data have indicated that the anticipated pickup is not materializing.
Last week, the government reported a larger-than-expected drop in orders for durable goods, a key indicator of future manufacturing activity.
Friday’s report showing slower growth in personal income could dampen consumer spending in coming months, although disposable income, adjusted for inflation, rose 0.1% in July after falling in June.
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