Modest rise in US consumer spending

US consumer spending barely rose in June as personal income failed to increase for the first time in seven months amid a decline in dividend payments, pointing to a moderate pace of consumption growth in the third quarter.

The Commerce Department said yesterday that consumer spending, which accounts for more than two-thirds of US economic activity, edged up 0.1 percent in June after an upwardly revised 0.2 percent gain in May.

There was also little sign of inflation. The personal consumption expenditures price index, excluding food and energy, rose 0.1 percent in June after a similar gain in May. In the 12 months through June, the so-called core PCE price index increased 1.5 percent after advancing by the same margin in May.

The core PCE is the Federal Reserve’s preferred inflation measure. The US central bank has a 2 percent target.

The data were included in the second-quarter gross domestic product report published last week. That report showed consumer spending rising at a 2.8 percent annualized rate, which accounted for the bulk of the economy’s 2.6 percent growth pace during the quarter. Consumer spending was previously reported to have gained 0.1 percent in May.

When adjusted for inflation, consumer spending was flat after rising 0.2 percent in May. June’s flat reading likely sets consumer spending on a moderate growth path in the third quarter.

Since accelerating at a 3.8 percent pace in the second quarter of 2016, consumer spending growth has stayed below 3 percent, restrained by sluggish wage gains.