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Saturday, Aug. 29, 1998
Personal incomes rise but spending slows
What may be temporary drop in motor vehicle sales accounts for decline in July spending
By ALICE ANN LOVE
Associated PressWASHINGTON - Americans held onto more of their rising incomes in July, leaving analysts wondering if a spending spree that has buoyed the United States in the midst of floundering foreign economies is coming to an end.
Personal incomes rose by 0.5 percent in July to a seasonally adjusted annual rate of $7.14 billion - slightly faster than a revised 0.3 percent gain in June, the Commerce Department said Friday.
But consumer spending, which accounts for two-thirds of the U.S. economy, fell 0.2 percent - the first drop in two years - to a seasonally adjusted rate of $5.8 billion. June spending had been up 0.6 percent.
What may be a temporary decline in purchases of motor vehicles accounted for the decrease in July spending, the Commerce Department said. Purchases of other goods and services continued to increase modestly.
Strikes at General Motors, not settled until the end of July, emptied some car dealers' lots, and sales incentives that boosted other auto sales in May and June expired.
Consumer confidence also slipped for the second straight month in August, according to a report earlier this week by the Conference Board, a private business research group in New York.
``Consumer spending could slow quite a bit eventually, leading to cutbacks in production and income, making for a meaningful economic slowdown,'' said Sung Won Sohn, chief economist with Norwest Corp. in Minneapolis. ``This could be the last hurrah for the booming economy.''
Many analysts note, however, that Americans' buying power remains strong, as their incomes continue to rise faster than inflation.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web