Personal Spending Up 0.1%, Incomes Up 0.4%

Washington, DC, July 31, 2007—Personal spending rose 0.1% in June after a 0.6% increase in May, according to a report from the Commerce Department.  Personal income rose 0.4% during the month for the second straight month.

Analysts had expected personal spending to increase 0.1% and personal income to increase 0.5%.

The report's price gauge, the personal expenditure price index, excluding food and energy, rose 0.1% for a fourth consecutive month. The gauge was up 1.9% from June 2006, the smallest increase since 2004.

Adjusted for inflation, spending was unchanged in June, after increasing 0.2% the prior month, the report showed.

Because the increase in spending was smaller than the gain in incomes, the savings rate improved to 0.6%, from 0.4% the prior month.

Disposable income, or the money left over after taxes, also rose 0.4% for a second month. Adjusted for inflation, disposable income increased 0.3%

Inflation-adjusted spending on durable goods, such as autos, furniture, and other long-lasting items, dropped 1.6%, the most since August. Purchases of non-durable goods were unchanged and spending on services, which account for almost 60% of all outlays, rose 0.2%.

Consumer spending rose at a 1.3% annual pace from April through June, a third of the previous quarter's increase and the smallest gain in more than a year, last week's report on gross domestic product showed.