American consumers have become thriftier, trimming spending as bigger wage gains fail to materialize and using every opportunity to rebuild nest eggs. The result may lower economic growth.
Household purchases unexpectedly decreased 0.1 percent in July, the first drop in six months, after rising 0.4 percent the prior month, Commerce Department figures showed today in Washington. Incomes rose at the slowest pace of the year and savings climbed to the highest level since the end of 2012.
While an improving job market is lifting confidence, it has yet to spur the broad-based increases in pay that will boost demand at retailers such as Williams-Sonoma Inc. (WSM) and Guess? Inc. (GES) The weak start for consumer spending, which accounts for almost 70 percent of the economy, prompted some economists to cut third-quarter growth estimates even as other data showed manufacturing was strengthening.
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