Americans, jolted by a credit crisis, job cuts and soaring energy costs, turned in the weakest spending performance in 17 months last month, further evidence that the risks of a recession are increasing.
The US Commerce Department said yesterday that consumer spending edged up by just 0.1 percent last month, the poorest showing since September 2006. And if the effects of inflation are removed, spending was flat, the third consecutive month of sluggish activity.
The prolonged slump in housing, rising job layoffs, soaring energy costs and a severe credit crisis are taking their toll on consumer confidence. All of these troubles are causing consumers to cut back on their purchases.
The 0.1 percent gain in spending was in line with expectations.
Personal incomes rose by a better-than-expected 0.5 percent last month, which was a surprise given that employers cut jobs for a second consecutive month last month.
A key inflation gauge that is tied to consumer spending showed a minuscule 0.1 percent gain last month, after excluding energy and food.
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