Consumer Spending Flat in May
NEW YORK (TheStreet) -- While salaries got a small boost in May, Americans haven't changed how much they spend.
The Department of Commerce reported that personal income grew by 0.3% while spending stayed unchanged for May. Income growth was about in line with expectations. However, analysts were predicting a fall in spending by 0.3%, according to Briefing.com.
Taking into account inflation, spending actually fell by 0.1% and incomes stayed about flat. The PCE price index ticked up 2.5% from one year ago.
The most recent data suggests a weakening in the consumer sector. Growing costs at grocery stores have forced consumers to spend more, but a drop in car and retail sales have put downward pressure on total spending.In April, salaries and spending had grown by 0.4%. In a week of thin economic data, investors are looking for any clues as to the health of the economy. A drop in spending might be bad news when spending makes up two-thirds of the U.S. economy. One could also argue that when Americans stash more away in banks, the saved money still drives economic activity through bank lending. The good news this morning is while inflation is high, it seems to be in check. Economists disagree whether inflated prices in the U.S. stem from monetary policy or from pressures abroad. -- Written by Chao Deng in New York. >To contact the writer of this article, click here: Chao Deng. >To follow the writer on Twitter, go to: @chao_deng >To submit a news tip, send an email to: firstname.lastname@example.org.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV