US consumers cut spending in August
Battered consumers, faced with weak income growth and rising inflation, trimmed their spending in August by the largest amount in nearly a year.
By Agencies |
Battered consumers, faced with weak income growth and rising inflation, trimmed their spending in August by the largest amount in nearly a year.
The commerce department reported Friday that consumer spending, after adjusting for inflation, dropped by 0.1% last month, the first decline since a 0.3% fall in September ’05, a month when business activity was disrupted by Hurricane Katrina.
Incomes, reflecting lackluster gains in employment, rose by just 0.3% in August, the weakest performance in nine months. Core inflation, which excludes energy and food, was up a worrisome 2.5% compared to a year ago, the biggest year-over-year increase in more than a decade.
The new report underscored how much the economy is slowing this year as consumers have been battered by record-high gasoline prices and a cooling housing market.
Falling home prices are making Americans more cautious about spending money because they feel less wealthy.
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