US consumer spending slips

US consumer spending unexpectedly fell in June to post the first decline in nearly two years as incomes barely rose, a government report showed, suggesting economic growth could remain subdued in the third quarter.

The Commerce Department said consumer spending slipped 0.2 per cent, the first drop since September 2009, after edging up 0.1 per cent in May.

When adjusted for inflation, spending was flat in June after easing 0.1 per cent the prior month. The decline came even as gasoline prices retreated from their peak just above $4 a gallon in early May and suggested the much-anticipated bounce back growth in the third quarter would lack vigour.

Consumer spending barely grew in the second quarter, inching up at an annual rate of only 0.1 per cent – the weakest pace since the end of the 2007-09 recession. Spending increased at a 2.1 percent rate in the first quarter.

That contributed to hold the economy to an anaemic growth pace of 1.3 per cent in the second quarter.