Consumer Spending In U.S. Was Unchanged In June As Savings Rate Jumps
This morning personal income and outlays data was released. That is basically a way of saying changes in consumers income and spending habits. As income had one of its largest month over month increases in months, consumers took this opportunity not to spend but to shore up their finances. Indeed, the personal savings rate (revised) rose to 4.4% compared to 3.6% in April. This was also reflected in the stagnant consumer spending environment with no change for the month versus expectations of a +0.1% gain. One explanation for this recent activity is consumers increased doubts in the current and near future outlooks of the economy. Uncertainties like this reduce spending and investments weakening the economy further and issues like this will play a more important role than ever in the coming November elections. Bloomberg continues, “Consumer spending in the U.S. stagnated in June as Americans used the biggest gain in incomes in three months to boost savings, indicating a weak handoff to the second half of the year.
Household purchases, which account for about 70 percent of the economy, were unchanged after a 0.1 percent decrease the prior month that was previously reported as little changed, a Commerce Department report showed today in Washington. The median estimate in a Bloomberg News survey of economists called for a 0.1 percent rise. Incomes rose 0.5 percent, lifting the savings rate to 4.4 percent, the highest in a year. The results may raise concern limited job prospects are causing Americans to pull back, crimping sales at companies such as Coach Inc. at the same time business investment is cooling. Federal Reserve policy makers meet today and tomorrow to determine whether more monetary stimulus is needed to shore up an economy that’s slowed for two straight quarters…”
Source - Bloomberg