Consumer Spending Drops as Income Stalls
Economists Differ on Whether Numbers Are Signs of a Long-Term Slide
By Nell Henderson
Washington Post Staff Writer
Wednesday, August 4, 2004; Page E01
Americans' income growth effectively stalled in June, and consumer spending plunged at the steepest monthly rate since September 2001, the government reported yesterday, fueling new concerns about the strength of the U.S. economic expansion.
Overall personal income was flat in June after adjusting for inflation and taxes, the Commerce Department said. Wages and salaries, the largest component of personal income, did not budge in June, even without such adjustments -- the worst showing since they dropped 0.1 percent in December.
Consumer spending dropped 0.7 percent in June, according to the Commerce report, reinforcing other signs that the U.S. economic expansion lost momentum in the spring with rising inflation, higher interest rates and a slowing pace of job creation.
The report comes as President Bush and Sen. John F. Kerry (Mass.), the Democratic presidential nominee, continue to spar over the effectiveness of the administration's economic policies. A series of tax cuts and Federal Reserve interest rate cuts helped boost economic growth for much of the past three years, but many analysts had expected stronger employment growth and income gains to fuel a more vibrant recovery by now....
http://www.washingtonpost.com/wp-dyn/articles/A37895-2004Aug3.html
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