Adjusted Consumer Spending Dropped In June

With Fewer Stimulus Checks, Consumers Saw After-Tax Income Weaken, Biggest Price Increase Since 1981

(AP)  U.S. consumer spending, after adjusting for inflation, fell in June as shoppers were hit with the biggest increase in prices in nearly three decades.

The Commerce Department reported Monday that consumer spending dipped by 0.2 percent in June, after removing the effects of higher prices, the poorest showing since a similar drop in February. The higher prices reflected a big surge in gasoline costs and helped to drive an inflation gauge tied to consumer spending up by 0.8 percent in June, the biggest increase since a 1 percent rise in February 1981.

The big rise in inflation ate up a part of the billions of dollars in stimulus payments delivered during the month. Personal incomes rose by a tiny 0.1 percent in June following a giant 1.8 percent increase in May.

The performance of incomes were skewed by how the department accounts for the billions of dollars in stimulus payments that have been made over the past three months. Those payments totaled $1.9 billion in April, when the program was just getting started, then $48.1 billion in May and $27.9 billion in June.

Those payouts made incomes and after-tax incomes soar in May compared to April but weaken in June since the level of June payments was lower than they had been in May.

Consumer spending before removing inflation rose by 0.6 percent in June after a big 0.8 percent increase in May. Much of that spending went to pay higher prices for gasoline and other items, however. Removing inflation, spending edged up by a more modest 0.3 percent in May and fell by 0.2 percent in June.

The overall economy, as measured by the gross domestic product, grew at a 1.9 percent rate in the April-June quarter, more than double the 0.9 percent increase in the January-March quarter.

Economists believe the $168 billion stimulus program will continue to lift the economy in the current quarter. They predict there will be a significant slowdown in the final three months of this year and early next year, though.

Some analysts believe GDP will shrink in those two quarters, giving the country back-to-back GDP declines, the traditional definition of a recession.

[mcvet-1]

What are you smoking? Can I have some too? I need it to ease the pain of what the GOP has done to me, my neighbors, and my country.

Posted by Cheetah-Man7 at 12:03 PM : Aug 04, 2008

LOL Some clinic is missing and inmate!! LOL

[mcvet-1]

Consumers don''''t "spend" anymore. What they do is "charge". Then, after maxing-out their charge cards, they dump the debt at bankruptcy. So nothing is really being "purchased".

Posted by SistaTee at 11:51 AM : Aug 04, 2008

I guess we just IGNORE the fact that their Jobs are now in some third world country and charge was the ONLY way they could continue to retain their homes and families?? Our standard of living is now dead last within the G-7 nations.... Don''t you think that MAYBE those policies that took us from first to last my be responsible?? Sieg Heil Bush

[mcvet-1]

Economists believe the $168 billion stimulus program will continue to lift the economy in the current quarter.

Definition of Economist is someone even to stupid to be a meteorologist, we all know how accurate meteorologist are. They have at least the disadvantage of mother nature. Economist couldn''''t find the truth if it was a pimple on their a**!

Posted by navpro at 12:26 PM : Aug 04, 2008

Oh I don''t know, they did pretty good in the 90''s when we weren''t dealing with IDIOTS like the Bush Administration!!

[element51]

ontheleft....Nice piece of satire...I hope. Although there isn''t much we can do, we have cut back on spending and are only buying what we absolutely have to have. Our disposable income has been reduced to almost a joke so it isn''t hard for us to cut back. It seems to me that there will come a point where the corporations will have so much inventory that prices will have to adjust. Obviously they can''t rake in the big bucks if no one can afford their products. As for the rich, no worries. They have theirs and will continue to get more. That''s just how it works.

[pepperwood2]

Trust Me! All of us Demos & Repugs need to give Wall Street a lesson. Just what are we suppose to do with the rising costs of gasoline, heating oil, food, energy & imported goods. Our families comes first.

Have pity on the economy & make a few more millionaires on Madison Avenue. Our Congress, with the help of their Oil buddies created this mess with little concern for the people. Now it is our turn to get back - no more spending or the purchase of commodity goods that are inflated. Maybe they''ll get the picture if we boycott them an curb our excessive wasteful spending. Let them compete for our dollar. Instead of lining up, with the help of Congress, to pick our pockets every change they get and laughing about all the way to banks.

[Gary Kempf]

Economists believe the $168 billion stimulus program will continue to lift the economy in the current quarter.

Definition of Economist is someone even to stupid to be a meteorologist, we all know how accurate meteorologist are. They have at least the disadvantage of mother nature. Economist couldn''t find the truth if it was a pimple on their a**!

[cheetah-man7]

GOP_forever ________This is all Clintons fault. We need to elect quality republican leaders.
_______________

What are you smoking? Can I have some too? I need it to ease the pain of what the GOP has done to me, my neighbors, and my country.

[cheetah-man7]

GOP_forever ________This is all Clintons fault. We need to elect quality republican leaders.
_______________

What are you smoking? Can I have some too? I need it to ease the pain of what the GOP has done to me, my neighbors, and my country.

[sistatee-2009]

Consumers don''t "spend" anymore. What they do is "charge". Then, after maxing-out their charge cards, they dump the debt at bankruptcy. So nothing is really being "purchased".

[lochlan-2009]

"U.S. consumer spending, after adjusting for inflation, fell in June as shoppers were hit with the biggest increase in prices in nearly three decades."

You think, and this is with their number fudging that makes Enron look like a kindergarten workshop. I can''t believe they even pointed out that the reason the gov. did a stimulus check was to hide the recession by definition.

Move some money over here, change a couple rules over there, adjust these numbers a little, and voila, "the economies doing great, just a little slow" (you just have less money and things cost more, is all).

Can you really blame America for being where we are, with the amount of uninformed people and the corruption we allow them to get away with.

Issue #1: Stop corruption in politics. (IT''S THE SOURCE AND REASON FOR ALMOST ALL THE COUNTRIES PROBLEMS).

[ontheleft]

Why does the "lib" media always write doom and gloom stories? Why not focus on the good economic news?

Exxon just set a record for highest quarterly profit ever. CEO pay is up 6% over last year. Sales of luxury yachts are up 30%. So much for incomes and spending being down.

Instead of reporting on food riots in third world countries, why doesn''t the "lib" media report on the record number of billionaires we have in the world? There''s lots of good economic news out there, you just have to know where to look.

[pirmin3]

"The politicians need to worry about rebuilding this country first.Posted by omega39"

You got that right. Enuf of this billion dollar give away c*rap. Take care of the US first!!!

[pirmin3]

"The politicians need to worry about rebuilding this country first.Posted by omega39"

You got that right. Enuf of this billion dollar give away c*rap. Take care of the US first!!!

[obama441]

wait till the dollar equals the Mexican peso....

[timdgrim]

This is all Clintons fault. We need to elect quality republican leaders.
Posted by GOP_forever
**********
To borrow a classic phrase from a poster a few days back: "Do you just type to hear the sound?"

[omega39-2009]

We need to stop sending jobs overseas and we need to quit pledging zillions of dollars to Africa for AIDS/HIV treatment. We have AIDS here in the US and in my lifetime, I have never seen any money sent overseas reach the hands of the those who need it.

Posted by barbaraf4

I agree, globalization, playing cop to the world, and welfare to third world countries seems to be a zero sum game for the US working class. The politicians need to worry about rebuilding this country first.

[barbaraf4]

We need to stop sending jobs overseas and we need to quit pledging zillions of dollars to Africa for AIDS/HIV treatment. We have AIDS here in the US and in my lifetime, I have never seen any money sent overseas reach the hands of the those who need it.

[obama441]

The troubles are growing so rapidly at some small and midsize banks that as many as 150 out of the 7,500 banks nationwide could fail over the next 6 to 12 months, analysts say.

[obama441]

USA is bankrupt...time for the world to switch currency