Quantcast
Get breaking news alerts via email

Click here to manage your alerts
FILE - In this Aug. 26, 2010, file photo, Kim Miller shops for clothes in St. Louis. On Friday, Aug. 30, 2013, the Commerce Department said that consumer spending rose just 0.1 percent in July from the previous month. That’s slower than June’s 0.6 percent increase. (AP Photo/Jeff Roberson, File)
U.S. consumer spending up weak 0.1 percent in July
First Published Aug 30 2013 11:12 am • Last Updated Aug 30 2013 12:10 pm

Washington • Income rose 0.1 percent in July following a 0.3 percent June gain. Overall wages and salaries tumbled $21.8 billion from June — a third of the decline came from forced furloughs of federal workers.

Consumers’ spending drives roughly 70 percent of economic activity. The weak spending report led some economists to sound a more pessimistic note about economic growth in the current July-September quarter. It follows July data showing steep drops in orders for long-lasting manufactured goods and new-home sales.

Photos
Join the Discussion
Post a Comment

"This is a disappointing report on a number of levels," said James Marple, senior economist at TD Economics. "Prospects for a pickup in economic growth in the third quarter hinge on a broad-based acceleration in spending by households and business to offset the ongoing drag from government. The data for the first month of the quarter are not following this script."

Several analysts said that economic growth is unlikely to match the 2.5 percent annual rate reported Thursday for the April-June quarter. That was more than twice the growth rate in the first quarter and far above an initial estimate of a 1.7 percent rate for April through June.

Marple predicts third-quarter growth will fall around 2 percent, perhaps even lower.

The Federal Reserve will consider the consumer spending and income data at its September meeting, when it decides whether to begin slowing its $85 billion a month in bond purchases. The bond purchases have helped keep long-term borrowing rates low.

But the most critical factor that the Fed will weigh is the August employment report, which will be released next Friday. It’s the final jobs report before the Fed meets.

Another concern is that rising interest rates could dampen consumer spending, particularly on homes and cars. Mortgage rates have already risen more than a full percentage point since May.

In July, the savings rate was unchanged at 4.4 percent of after-tax income. That was the smallest since the rate had been 4.3 percent in March.

The small rise in spending was driven by a 0.8 percent gain in purchases of nondurable goods, such as clothing. Purchases of durable goods such as autos fell 0.2 percent and purchases of services such as utilities and doctor’s visits were unchanged in July.


story continues below
story continues below

A price gauge tied to consumer spending was up a small 0.1 percent in July compared to June. Prices excluding volatile food and energy are up just 1.4 percent compared to a year ago, significantly below the Federal Reserve’s 2 percent target for inflation.



Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Reader Comments Read All Comments Post a Comment
Click here to read all comments   Click here to post a comment


About Reader Comments


Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
Staying Connected
Videos
Jobs
Contests and Promotions
  • Search Obituaries
  • Place an Obituary

  • Search Cars
  • Search Homes
  • Search Jobs
  • Search Marketplace
  • Search Legal Notices

  • Other Services
  • Advertise With Us
  • Subscribe to the Newspaper
  • Login to the Electronic Edition
  • Frequently Asked Questions
  • Contact a newsroom staff member
  • Access the Trib Archives
  • Privacy Policy
  • Missing your paper? Need to place your paper on vacation hold? For this and any other subscription related needs, click here or call 801.204.6100.