The only long term positive was an increase in the savings rate, but for an economy now build on consumption, what is good for the individual is not good for the general economy, at least in the near term.
The market was already down this morning ahead of this punk data, as we ping pong from one sovereign debt situation to another. With the U.S. kicking the can down the road, now we return to Italy and Spain.
The ECRI is looking genius again for the call 3-4 months ago for a material slowdown in the U.S. economuy.
- Consumer spending in the U.S. unexpectedly dropped in June for the first time in almost two years as a slump in hiring caused households to retrench. Purchases decreased 0.2 percent, after a 0.1 percent gain the prior month, Commerce Department figures showed today in Washington. The median estimate of 77 economists surveyed by Bloomberg News called for a 0.1 percent increase.
- Incomes grew at the slowest pace since November and the savings rate climbed. The lack of jobs combined with wage gains that have failed to keep pace with inflation raise the risk of further cuts in consumer spending, which accounts for 70 percent of the world’s largest economy.
- “Consumers ended the quarter on a pretty poor note,” said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston, who projected spending would drop. “The third quarter is looking very soft too. Consumers are facing lackluster wage growth in this phase of still-high gas prices.”
- Incomes climbed 0.1 percent in June following a 0.2 percent gain the prior month that was revised down. Economists had forecast incomes would rise 0.2 percent, according to the Bloomberg survey. Wages and salaries were little changed, the weakest reading since November.
- The savings rate climbed to 5.4 percent, the highest since September, from 5 percent.
- Weekly earnings adjusted for inflation dropped 0.9 percent in the 12 months ended June on average, according to figures from the Labor Department.