US consumer spending slows

US consumer spending slows
By Eoin Callan in Washington
Copyright The Financial Times Limited 2007
Published: July 31 2007 14:39 | Last updated: July 31 2007 14:39


US consumer spending rose at the slowest pace in nine months in June in a sign of cooling household demand.

Spending rose 0.1 per cent after a gain of 0.6 per cent the previous month, according to the Commerce Department.

The slowdown is likely to be a source of concern for policymakers, although many economists expect consumer spending to hold up amid strong hiring and rising incomes.

Incomes rose 0.4 percent in June for the second month, according to the report, slightly less than economists were expecting.

Consumer spending accounts for more than two-thirds of the economy but has been replaced as the main driver of growth in recent months as business activity picks up.

The Federal Reserve’s preferred gauge of inflation rose less than forecast, increasing 0.1 per cent for the fourth straight month.

The core personal consumption expenditure index - excluding volatile food and energy prices - was up 1.9 per cent from a year ago, the smallest increase in three years.