WASHINGTON, July 31 Spending by American
consumers fell in June for the first time in nearly a year when
accounting for inflation, suggesting the economy lost momentum
as it ended the second quarter.
Consumer spending, which makes up about 70 percent of U.S.
economic activity, f ell 0.1 percent when adjusted for rising
prices, the Commerce Department said on Tuesday.
Before making price adjustments, spending was flat. That was
just b elow the median forecast in a Reuters poll of 0.1 percent
Pressure is rising on policymakers at the U.S. Federal
Reserve to do more to help the sputtering U.S. economy. The
faltering recovery also weighs on President Barack Obama's hopes
of reelection in November.
The Commerce Department had already reported that economic
growth slowed o ver the entire second quarter a s consumers spent
at their slowest pace in a year. But Tuesday's data showed
consumer spending lost momentum throughout the period when
taking inflation into account.
U.S. household income rose in June by 0.5 percent - the most
in three months - although consumers socked away part of the
extra cash by saving more.
Analysts had expected a gain of 0. 4 percent. After tax
income climbed 0.3 percent in J une w hen accounting for higher
With price-adjusted incomes rising in June and consumption
f alling, the saving rate f or households rose to 4.4 percent, its
highest level in a year.
A report on Friday is expected to show the jobless rate
holding at 8.2 percent in July. It has been above 8 percent
since February 2009 - nearly all of Obama's time in office so
On Tuesday, policymakers at the U.S. Federal Reserve were to
start a two-day meeting where Fed Chairman Ben Bernanke has said
they would be looking for signs of any stall in the recovery of
the labor market.
No major policy announcement is expected although some
economists think the Fed this week could push further into the
future its conditional pledge to keep rates near zero through
Inflation pressures appear to be muted.
A price index for personal spending rose 0.1 percent in
J une. In the 12 months through J une, the PCE index was up 1 .5
p ercent, ma tching May's reading which was th e lowest si nce
January 2011 and bel ow th e Fed's target of 2 percent.
So-called core PCE, which remove s volatile food and energy
prices, rose 1.8 percent in the 12 months through June.