Bulk Of Consumer Spending Rise Tied To Energy, Food
The latest Commerce Department data indicates that in June, personal income rose by $24.6 billion, or 0.2%, while personal spending increased by $53 billion, or 0.4%. Personal income rose primarily from increases to private salaries and wages, the Commerce Department noted. Meanwhile, personal expenditures excluding energy and food rose just 0.1%, suggesting most of June’s spending by Americans may have been on everyday purchases such as gas, electricity, and groceries. There was a decline in spending for new motor vehicles for the month. However, the results showed overall gains and MarketWatch notes that June was “the third straight strong increase” in spending, “a good sign for the economy,” and the data “matched Wall Street expectations.” Marketwatch points out that consumers make up “70% of economic activity,” so indications that they are spending more may help stabilize the US economy for the rest of the year. MarketWatch adds, “The PCE index, the Federal Reserve’s preferred inflation barometer, increased 0.9% in the 12 months ended in June,” and “unchanged from in the prior month.” Although there have been increases in inflation, so far there have been no indications of “widespread price pressures in the U.S. economy.”
What This Means For Small Businesses
Small businesses continue to struggle due to economic uncertainty. News that Americans have more funds and are spending more is positive for small businesses, as it could translate into growing sales. However, other economic indicators remain weak, and it will take far more than a positive month of one economic indicator to alleviate small business owners’ uncertainty. As NFIB Chief Bill Dunkelberg said in the latest Small Business Economic Trends report, “Our data indicate that there will be no surge from the small business sector anytime soon and prospects for economic growth are cloudy at best.”
Additional Reading
The Wall Street Journal “Moneybeat” blog also reports the latest personal income and outlays data.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.
