As if we needed any more bad news. Via the AP:
Americans cut back on their spending in June for the first time in nearly two years and their incomes grew by the smallest amount in nine months, a troubling sign for an economy that is barely growing.
Consumer spending dropped 0.2 percent in June, the Commerce Department said Tuesday. Some of the decline was caused by declining food and energy prices, which had spiked in recent months. When excluding spending on those items, consumer spending was flat.
Incomes rose 0.1 percent, the weakest growth since September. Many people are responding by saving more. The personal savings rate rose to 5.4 percent of after-tax incomes, the highest level since August 2010.
The data confirmed last week’s report that showed the economy expanded at a tepid annual rate of 1.3 percent in the spring after only 0.4 percent growth in the first three months of the year. But it also highlighted that consumer spending weakened during the April-June quarter, which could mean the sluggish economy is worsening.
What a surprise. Turns out a “recovery” based almost entirely on a Keynesian spending spree financed with unprecedented debt accumulation and monetization combined with open hostility toward the private sector and energy development is no recovery at all. Who’d a thunk it? This latest depressing news follows last week’s revelation that GDP has virtually stalled and comes three days before Friday’s July unemployment report is released. Can you say double-dip? Look for the debt-ceiling kerfuffle to quickly recede into the background as attention returns to Obama’s dismal record on the economy in general and unemployment in particular. Who knows, Obama may even prefer the debt ceiling story to dominate the news rather than his overall economic record. Of course at the moment he has far more important matters to attend to.