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11th of August 2011
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US consumer spending down in June

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by Kay Mitchell

The Commerce Department has today reported an unexpected fall in consumer spending in the US for the month of June.

Spending fell 0.2% on the month – the first fall in almost two years – suggesting the economic recovery is losing momentum.

Furthermore, the figures confounded analysts’ expectations for a 0.1% increase.

Consumer spending is closely monitored as it accounts for approximately 70% of total economic output and the latest figures will further raise fears for the world’s largest economy.

Consumers continue to be squeezed due to higher petrol prices, while rising unemployment has meant households are reining in their spending.

Meanwhile, the Commerce Department also said personal incomes grew 0.1% in June – the smallest pace for nine months.

Last week, the Commerce Department said the US economy grew by 1.3% on an annual basis in the April to June period.

The figure was far short of expectations of a reading of 1.8%.

Meanwhile, first quarter growth was sharply revised downwards to 0.4% from 1.9%, also casting doubts over the strength of the recovery.

Today’s figures resulted in big falls on the UK stock market.

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News posted: August 2, 2011

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