Newspaper article THE JOURNAL RECORD

Consumer Spending Up Slightly

Newspaper article THE JOURNAL RECORD

Consumer Spending Up Slightly

Article excerpt

WASHINGTON (AP) -- Americans, whose buying binges have powered economic growth, spent cautiously in May for the second month in a row, another tentative sign that the robust economy may be slowing.

Consumer spending rose by just 0.2 percent in both April and May, the Commerce Department said Friday. That is an enormously vital indicator of the rate of growth in the world's largest economy, because personal spending accounts for two-thirds of economic activity.

May's spending increase matched many analysts' expectations. April's figure was revised down from a 0.4 percent rise the government reported last month.

"It appears as if there really is some caution developing in the spending habits of consumers," said economist Joel Naroff of Naroff Economic Advisors. "The love affair with SUVs, new kitchens and other big-ticket items seems to be waning."

The Federal Reserve has boosted interest rates six times in the last 12 months to slow the economy and keep inflation under control. The Fed's rate increases are designed to make borrowing more expensive and cool demand for such big-ticket items as cars and homes.

On Wednesday, the Fed, citing preliminary signs of slowing, decided not to raise rates for a seventh time but left the door open to further rate increases should inflation worsen. Friday's report also showed that Americans' spending on durable goods -- such as cars and other costly manufactured goods expected to last at least three years B fell 1 percent in May. That followed a 0.7 percent drop the month before.

"Consumers are rediscovering the virtues of thrift, at least for a couple of months," said Paul Taylor, chief economist for the National Automobile Dealers Association.

Spending on nondurable goods, such as food and fuel, rose a slim 0.2 percent after a 0.2 percent decline in April.

Meanwhile, Americans' incomes, which include wages, interest and government benefits, rose 0. …

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