NEW YORK ( TheStreet) -- Personal spending decreased for the first time since September 2009, dampening hopes for robust growth going into the summer.
The Commerce Department reported that personal spending for June decreased by 0.2, after a revised 0.1% increase in May.
Personal spending came short of consensus estimates, which was looking for a 0.1% uptick. Briefing.com, however, had a more pessimistic view that consumers would pull back on spending by 0.3%. Economists already knew that overall consumer spending had ticked down in the second quarter from a government GDP report last Friday. June's update, however, suggests weak momentum especially toward the end of the second quarter.
Since consumer spending accounts for more than two-thirds of the economy, the latest update does not bode well for third quarter GDP estimates. UBS estimates 2.5% GDP growth in the third quarter and 2% in the fourth quarter."We're still looking for an economic rebound," said Jeremy Zirin, chief investment strategist at UBS. "The question is how much of negative momentum of first half carries over." Meanwhile, income for June inched up 0.1%, about in line with consensus estimate. It represents a slightly smaller gain than May's revised 0.2% increase in income. The government had originally estimated that May's income grew by 0.3%. The personal consumption expenditure index increased 0.1% after a 0.2% increase in May. The latest number also came short of economists' expectations for a 0.2% rise. -- Written by Chao Deng in New York.