• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Consumer spending up 0.8 percent in June

Posted on: Tuesday, 2 August 2005, 07:47 CDT

WASHINGTON (Reuters) - U.S. consumer spending advanced a robust 0.8 percent in June as shoppers took to auto showrooms to enjoy sales incentives that helped keep inflation in check, a government report showed on Tuesday.

Income in June rose 0.5 percent, the Commerce Department said, a touch stronger than the 0.4 percent gain analysts on Wall Street had expected. The increase in spending, which was already reflected in a report on second-quarter economic growth released on Friday, was as expected.

An inflation index contained in the spending and income report showed prices steady, both overall and excluding volatile food and energy costs. Economists had expected the non-food and energy gauge to edge up 0.1 percent.

Over the past year, this core price index -- eyed closely by policy-makers at the Federal Reserve -- is up 1.9 percent, at the high end of the central bank's perceived comfort zone. However, a narrower measure that looks only at prices that can be observed in markets, showed a more moderate rise of 1.6 percent.

The burst in consumer spending in June represented a rebound from weak sales in May and showed the economy closing out the second quarter on a strong note.

Taking into account the bite from taxes, consumer income was still up 0.5 percent.

June's strong spending pushed the saving rate, the percent of disposable income socked away by consumers, down to zero -- the lowest since October 2001, just after the Sept. 11 attacks.

Source: REUTERS

More News in this Category