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U.s. Consumer Spending Stagnates In June

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Consumer spending and personal incomes were stagnant in June, according to government statistics released on Tuesday, the latest indication that the economy would continue to struggle in the second half of the year.

The Department of Commerce figures showed that consumers were still trying to save money while also paring down their debts. They represent the freshest evidence of a weak economic recovery plagued by unemployment, a sickly housing market and uncertain consumer confidence.

Personal income was flat in June, compared with a slight 0.3 percent rise in May, the Commerce Department figures showed on Tuesday. Disposable personal income, or income after taxes and expenditures, was also flat, compared with slight increases in May.

The figures also showed that consumers are pocketing more of their cash. Personal savings as a percentage of disposable personal income was 6.4 percent in June, compared with 6.3 percent in May. It was about slightly more than 2 percent before the recession began.

“It reinforces the general idea that consumers are busy deleveraging and saving money,” said Dan Greenhaus, the chief economic strategist for Miller Tabak & Company. “For now, the story of the day is deleveraging.”

In addition to releasing consumer spending figures, the Commerce Department reported that factory orders declined 1.2 percent in June to a seasonally adjusted $406.4 billion. Analysts expected a smaller drop. The agency also revised May’s decline to a sharper 1.8 percent instead of 1.4 percent.

And the National Association of Realtors said that the number of buyers who signed contracts to purchase homes dropped in June. The group said that its seasonally adjusted index of pending home sales declined 2.6 percent in June to a reading of 75.7. The association also slightly lowered May’s reading to 77.7. Economists surveyed by Thomson Reuters had expected the June index to increase to 78.1.

People need to save but also in a consumer economy they need to spend.

The bubble was not sustainable consumption levels will return back to stable levels.

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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