Weak income curbs consumer spending
On Friday September 30, 2011, 9:08 am
WASHINGTON (Reuters) – Incomes fell for the first time in nearly two years in August and consumers dug into their savings to keep spending, according to a government report that showed the impact of the weak jobs market.
The Commerce Department said on Friday spending rose 0.2 percent, in line with conomists’ expectations, after increasing 0.7 percent in July. When adjusted for inflation, however, spending was unchanged after rising 0.4 percent in July.
Consumer spending accounts for about 70 percent of U.S. conomic activity.
Income slipped 0.1 percent, the first decline since October 2009, with private wages and salaries dropping $12.2 billion after increasing $23.8 billion in July.
conomists had expected income to edge up 0.1 percent.
“What you’re basically getting is a scene where consumers are losing momentum, they’re losing momentum on income and as a result of that they’re slowing down on spending,” said Steven Ricchiuto, U.S. chief Conomist at Mizuho Securities in New York.