Consumers Cut Back On Spending

ByJohn S. McClenahen Manufacturing executives who cut back on personal spending in June sure weren't alone. The U.S. Commerce Department reported Aug. 3 that personal consumption expenditures (PCE) fell 0.7% in June, far more than economists expected and in dramatic contrast to May's 1% gain. PCE totaled $8.1389 trillion in June, down $53.3 billion from $8.1922 trillion in May. Auto purchases accounted for most of June's decrease, just as they had for most of May's increase. So-called real PCE, the nominal figure minus inflation, fell 0.9% in June, compared with a 0.6% rise in May. At the same time consumers were reducing spending, their incomes edged up only a bit. Personal income increased 0.2% in June, a tenth of a percentage point below UBS Investment Research's expected 0.3% rise and just a third of the 0.6% gains recorded in April and May.