Consumer Spending Was Stagnant in May
In another sign the nation's economic recovery has slowed, consumer spending was flat in May even as incomes rose 0.3 percent. According to a Dow Jones survey, economists expected consumer spending, a key driver of economic growth, to increase by 0.1 percent and income to rise by 0.4 percent. "May's weak spending levels give further evidence that the recovery has slowed during the first half of the year, as a rebound in the unemployment rate combined with higher gasoline and food prices have caused consumers to tighten their belts," reports The Wall Street Journal. The stagnant reading in the Commerce Department's monthly report follows 10 straight months of gains in spending, notes Reuters, suggesting that "the second quarter will be much slower than the 2.2 percent annual rate recorded in the first three months of the year." However, gas prices have decreased significantly since the $4.02 drivers were paying in earl May, suggesting a chance for growth in the third quarter. "It was a little bit of a blow to consumers from the higher energy prices and the supply chain issues. We'll see a nice rebound in third-quarter GDP on the back of full production in the auto industry," said Stephen Stanley, chief economist at Pierpont Securities.
