WASHINGTON – Consumer spending, after adjusting for inflation, fell in June as shoppers were hit with the biggest increase in prices in nearly three decades.
The Commerce Department reported Monday that consumer spending dipped by 0.2 percent in June, after removing the effects of higher prices, the poorest showing since a similar drop in February. The higher prices reflected a big surge in gasoline costs and helped to drive an inflation gauge tied to consumer spending up by 0.8 percent in June, the biggest increase since a 1 percent rise in February 1981.
The big rise in inflation ate up a part of the billions of dollars in stimulus payments delivered during the month. Personal incomes rose by a tiny 0.1 percent in June following a giant 1.8 percent increase in May.
Wall Street headed toward a slightly lower opening Monday after the disappointing report on consumer spending. Dow Jones industrial average futures fell 13, or 0.11 percent, to 11,293.
The performance of incomes were skewed by how the department accounts for the billions of dollars in stimulus payments that have been made over the past three months. Those payments totaled $1.9 billion in April, when the program was just getting started, then $48.1 billion in May and $27.9 billion in June.
Those payouts made incomes and after-tax incomes soar in May compared to April but weaken in June since the level of June payments was lower than they had been in May.