Consumer spending in the U.S. rose more than forecast in July, exceeding gains in incomes, a sign the improvement will not last without more jobs.
Purchases rose 0.4%, the most since March, after little change the prior month, Commerce Department figures showed today in Washington. Incomes climbed 0.2%, less than projected, and the savings rate dropped.
Disposable incomes, or the money left over after taxes, dropped for the first time since January after adjusting for inflation, showing the lack of jobs is hurting Americans’ spending power. Companies from Intel Corp. to J. Crew Group Inc. are cutting forecasts as unemployment and flagging confidence prompt households to scale back.
The median estimate of economists surveyed by Bloomberg News called for a 0.3% advance in spending after a previously reported unchanged result for June. The 71 projections ranged from unchanged to an increase of 0.5%.
Economists forecast incomes would also rise 0.3%, following no change in June, according to the Bloomberg survey.
Wages and salaries increased 0.3%. Inflation-adjusted incomes after taxes fell 0.1% last month after a 0.1% June increase.
The savings rate decreased to 5.9% last month from 6.2% in June.
Today’s report also showed inflation was accelerated. The gauge tied to spending patterns increased 1.5% from July 2009, compared with a 1.4% gain in the 12 months ended in June.
The Federal Reserve’s preferred price measure, which excludes food and fuel, rose 0.1% in July from the prior month and was up 1.4% from a year earlier, matching the median forecast of economists surveyed.
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