U.S. Consumer Spending Falls for First Time in Six Months

[mahatmakanejeeves]

Source: Bloomberg

By Lorraine Woellert Aug 29, 2014 8:46 AM ET

Consumer spending in the U.S. unexpectedly dropped in July for the first time in six months, a sign households are lagging behind as wages fail to accelerate.

Household purchases decreased 0.1 percent after increasing 0.4 percent in June, Commerce Department figures showed today in Washington. None of the 79 economists in a Bloomberg survey projected a decrease. Incomes climbed 0.2 percent, the smallest monthly advance this year.

Consumer spending, which accounts for about 70 percent of the economy, has been held back by tight credit and meager wage growth that is barely able to keep up with inflation. A sustained labor market upswing is needed to lift earnings and help boost outlays at retailers such as Ross Stores Inc.
....

“It’s pretty apparent that the low- to moderate-income customer is struggling,” {Ross Stores Inc. President and Chief Operating Officer Michael O’Sullivan} said on an Aug. 21 earnings call. “We don’t see a lot of evidence that that’s going to change in the back half. We could be wrong but we don’t see a lot of evidence for that, and we expect the environment to remain pretty promotional.”
....

To contact the reporter on this story: Lorraine Woellert in Washington at [e-mail]

To contact the editor responsible for this story: Carlos Torres at [e-mail]

Read more: http://www.bloomberg.com/news/2014-08-29/consumer-spending-in-u-s-falls-for-first-time-in-six-months.html

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The source:

News Release: Personal Income and Outlays

[merrily]

1. Rec only for visibility. Back to school and winter holiday shopping will

cause an uptick soon.

For one thing, we spend a lot more on Halloween than I previously realized.

[progree]

2. They are seasonally adjusted numbers (not that that's an exact science)

http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm

That said, July's dip in consumer expenditures is not a big deal -- I never get excited about a one-month change figure. The last 5 months (March thru July) have been pretty good, with the exception of the -0.1% dip in the last month, July --

[font face = courier new]
% change in consumer expenditures from previous month
Mar````April```May```June```July
+0.8%, +0.2%, +0.3%, +0.4%, -0.1%
[/font]

[merrily]

3. I agree. Nothing to go nuts about.