Consumer Spending in U.S. Stalls as Fuel Prices Jump: Economy

English: Fuel prices today What will this sign show in one year? (Photo credit: Wikipedia)

San Francisco Sept. 28. Stock investing .-- Consumer spending barely rose in August after the surge in gasoline prices squeezed Americans’ paychecks, showing the biggest part of the economy is struggling to contribute to the economic recovery.

Purchases rose 0.1 percent after adjusting for inflation following a 0.4 percent gain in July, according to data from the Commerce Department issued in Washington today. Other reports showed business activity unexpectedly contracted in September, while consumer sentiment improved.

Households may find it difficult to boost spending as slack employment generates income gains that scarcely cover rising food and fuel bills. At the same time, a real estate market that shows signs of stabilizing and higher stock prices are giving Americans reason to be less pessimistic about the future, which may prevent demand from deteriorating further.

“We are going to get more of the same, very slow growth in consumer spending,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York, who correctly projected the increase in purchases. That is “hardly surprising given the state of income growth and what is going on in the labor market.”

Stocks dropped after the reports and as investors awaited results of stress tests on Spanish banks. The Standard & Poor’s 500 Index fell 0.4 percent to 1,441.95 at 1 p.m. in New York. Treasury securities rose, sending the yield on the benchmark 10- year note down to 1.65 percent from 1.66 percent late yesterday. ... Continue to read.

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