U.S. Consumer Spending, Incomes Cool in June

While weak, both economic performances were stronger than expected.

U.S. consumer spending and incomes cooled in June after getting a boost a month earlier from a vast emergency economic stimulus, a government survey showed Monday. The Commerce Department reported that consumer spending rose 0.6% in June while incomes rose a mild 0.1%, marking the weakest rise in incomes since April 2007. Both readings were nonetheless stronger than expected as most economists had forecast that spending increased 0.5% and incomes contracted 0.1%. Spending had accelerated at a 0.8% clip in May while incomes rose a revised 1.8%. Both measures received a shot in the arm from the government's $168 billion economic stimulus, which was stuffed with one-off tax rebates. The monthly snapshot is followed closely by the financial markets because consumer spending is the main driver of U.S. economic activity. Although world oil prices have declined slightly in recent weeks from record peaks over $147 a barrel, the report showed a surge in its inflation readings. The PCE (personal consumption expenditures) price index rose 0.8% in June -- marking its strongest monthly gain since 1997 -- following a gain of 0.5% in the prior month. The core PCE rate, which excludes volatile food and energy costs, increased 0.3%, marking its biggest increase since September of last year. Copyright Agence France-Presse, 2008

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