US June consumer spending up just 0.1 pct, core PCE price index up 0.1 pct

BY

US consumers slowed their spending significantly in June, even as their incomes rose and
inflation remained steady, the Commerce Department said today.

The 0.1 pct increase in personal consumption spending last month was the lowest since a 0.1
pct decline in September of last year.

Adjusted for inflation, consumer spending was flat in June.

Economists were looking for slightly less of a slowdown to +0.2 pct in nominal spending, after
May s revised +0.6 pct.

Inflation measured by the core PCE price index remained steady, rising 0.1 pct for the fourth
month in a row. That left the year-over-year increase at 1.9 pct, within the Federal Reserve s
1-2 pct "comfort zone."

The 1.9 pct increase was what economists expected. However, revisions put the May
year-over-year core PCE rate up a tenth of a percentage point to 2.0 pct.

The overall PCE price index, including food and energy, also rose 0.1 pct last month, reflecting a big drop in gasoline prices that began in May. The overall index was up 2.3 pct from June of
2006.

Nominal personal incomes grew 0.4 pct in June, a tenth of point less than expected and the
same as May s increase. Adjusted for inflation and taxes, real disposable personal income was up 0.3 pct after falling 0.1 pct the month before.

The combined spending reduction and income growth left a personal savings rate of 0.6 pct in
June, up two tenths from May.

Also today, Commerce issued revised personal income and consumption data going back through 2004. They showed somewhat higher incomes, lower spending, more savings and not much
change in inflation compared to the previous reports.

JKL

thanks