Overcast73° WeatherOvercast73° Weather

Consumers spending flat in June, while savings rate keeps growing

Consumers are saving more and being picky about how they spend their money, new data show.

Personal spending was unchanged in June, the Commerce Department reported Tuesday.

It was the third straight month of lackluster consumer demand. Incomes were also flat, the weakest showing in nine months. And the personal savings rate rose to 6.4 percent of after-tax incomes in June. The savings rate is now about three times the 2.1 percent average for all of 2007, before the recession began.

The disappointing report on spending and income was among a raft of reports released Tuesday that confirmed the economy ended the April-to-June quarter on a weak note.

Factory orders dropped 1.2 percent in June to a seasonally adjusted $406.4 billion, the Commerce Department said. It was the second consecutive decline after nine straight months of gains. Lower demand for steel, construction machinery and aircraft dragged down the figure.

And the number of buyers who signed contracts to purchase homes fell in June. The National Association of Realtors says its seasonally adjusted index of sales agreements for previously occupied homes dipped 2.6 percent to a reading of 75.7. That was the lowest on records dating to 2001 and down nearly 19 percent from the same month a year earlier.

Last week the government said economic growth for the second quarter slowed to 2.4 percent. Many analysts believe it will dip further in the second half of the year as high unemployment, shaky consumer confidence and renewed troubles in housing weigh on the year-old economic recovery.

Economists are worried that the financial troubles weighing on households could cause spending to ebb even more in the second half of the year. If spending is further restrained, businesses will stay cautious about hiring.

The weak economy is keeping a lid on inflation. A price gauge tied to consumer spending dropped by 0.1 percent in June. Prices are up just 1.4 percent over the past 12 months, well within the Federal Reserve's comfort zone for inflation.

Consumers spending flat in June, while savings rate keeps growing 08/03/10 [Last modified: Tuesday, August 3, 2010 9:30pm]

© 2014 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...