WASHINGTON (9/2/14)--Personal income and consumer spending both returned disappointing results in June, according to reports released on Friday.
Personal income increased at a 0.2% rate in July, the slowest rate since December, the Bureau of Economic Analysis reported Friday (Moody's Aug. 29).
Meanwhile, consumer spending, which accounts for about 70% of the economy, dropped in July for the first time in six months. Household purchases decreased 0.1% after increasing 0.4% in June, the Commerce Department reported. None of the 79 economists in a Bloomberg survey projected a decrease (Aug. 29).
In no other month this year has personal income grown at a rate less than 0.4%.Wage income growth also slowed to 0.2%. Rental income led gains as dividend income growth slowed. Rapidly rising tax payments limited disposable income increases to 0.1%. Nominal consumer spending fell 0.1%.
Overall price growth slowed to 0.1%, and core price gains held steady at a modest rate. Real spending fell 0.2%. Spending was hurt by the decline in vehicle sales as real durable goods spending posted the largest decline.
Real nondurable and service spending also fell for the month. The saving rate rose to 5.7%.
Healthy consumer fundamentals are supportive of spending, making continued declines unlikely, Moody's said. Job growth is strong and gains are now coming broadly across industries and wage tiers. Wage and salary income increases are stronger this year than they have been since the recession, although growth in wage rates remains tepid.
Other reports Friday indicated consumer sentiment unexpectedly rose in August and manufacturing in the Midwest region pickup more than projected, Bloomberg reported.