Washington, D.C. -- Consumer spending in the United States slowed in August, impacted by falling incomes and sporadic hiring, according to a report released Friday by the Commerce Dept. The report came amid news that incomes unexpectedly dropped for the first time in almost two years.
Commerce Dept. figures showed that purchases edged up 0.2% after a 0.7% increase in July. However, a 0.2% increase in prices wiped out the slight spending gain. Incomes dipped 0.1%, the first decline since October 2009.
“Consumers right now have extremely low confidence,” Carl Riccadona, senior U.S. economist at Deutsche Bank Securities, told Bloomberg. “They have a sour assessment of economic conditions and they are facing a lot of uncertainty about future earnings and employment prospects, and because of that there is a degree of hesitancy with respect to big ticket purchases.”
The median estimate of 81 economists surveyed by Bloomberg News called for a 0.2% increase in nominal sales. Projections ranged from decreases of 0.2% to increases of 0.4%. The Commerce Department revised the July spending figure from a previously reported 0.8% gain.
In related news, the Thomson Reuters/University of Michigan final index of consumer sentiment climbed to 59.4 in September, higher than forecast, from 55.7 in August.