Strapped US consumers curb spending as inflation bites

0 Comments | AFP, August, 2008

WASHINGTON (AFP) — US consumers snapped shut wallets as a boost from tax rebates wore off and inflation soared in July, government data showed Friday in what could be a bad omen for an economy dependent on consumer spending.

Spending rose 0.2 percent in July from June, the weakest gain since February as consumers shied away from durable goods purchases of cars and other big-ticket items, the Commerce Department reported.

Personal incomes slid 0.7 percent, the steepest drop since August 2005.

Disposable incomes, after taxes, fell 1.1 percent in July following a 1.9 percent decline in June.

Spending in July was in line with most analysts' forecasts but the decline in incomes was sharply steeper than the 0.2 percent expected.

The Commerce...