U.S. consumer spending growth eases to 0.2 percent in May

Nathan Andrada – Fourth Estate Cooperative Contributor

Washington, DC, United States (4E) – Spending by U.S. consumers rose at a less than anticipated pace in May, raising concerns about the strength of the projected recovery in U.S. economic growth in the second quarter of the year.

Personal spending, which measures how much households pay for everything from food to health care, climbed 0.2 percent in May from the previous month, according to the Commerce Department report released Thursday. The increase was driven by higher prices and came after the figure was unchanged in April. Meanwhile, spending fell when adjusted for inflation.

Despite some gains in employment and the stock market, households’ budgets are being strained by elevated prices at service stations and grocery stores. Shoppers’ spending will likely stay tamed until there are further signs of improved wages.

Following the sharp decline of output in the first quarter, the report raises concerns about the U.S. economy’s underlying strength.

However, Thursday’s report showed some positive developments too, with personal income, which reflect households’ incomes from wages, investment and government aid, climbed 0.4 percent in May. The gain is the fourth straight month that income rose, which suggests that the job market is boosting consumers’ paychecks.

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