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Consumer Spending in U.S. Stagnates

Bloomberg - Sep 28, 2012

nsumer spending barely rose in August after the surge in gasoline prices squeezed Americans’ paychecks, showing the biggest part of the economy is struggling to contribute to the economic recovery.

Purchases rose 0.1 percent after adjusting for inflation following a 0.4 percent gain in July, according to data from the Commerce Department issued in Washington today. Other reports showed business activity unexpectedly contracted in September, while consumer sentiment improved.

Households may find it difficult to boost spending as slack employment generates income gains that scarcely cover rising food and fuel bills. At the same time, a real estate market that shows signs of stabilizing and higher stock prices are giving Americans reason to be less pessimistic about the future, which may prevent demand from deteriorating further.

“We are going to get more of the same, very slow growth in consumer spending,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York, who correctly projected the increase in purchases. That is “hardly surprising given the state of income growth and what is going on in the labor market.”

Read Full Article from Bloomberg

- Posted: 2012-09-28 14:11:35

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