By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) — The second quarter ended on a positive note, with consumer spending accelerating while inflation’s slowdown was arrested, the Commerce Department reported Friday.
The report fleshes out monthly details hidden in the quarterly data released Wednesday that showed the economy expanded at a modest 1.7% annual pace in the second quarter.
Incomes rose 0.3%, below Wall Street expectations of a 0.5% gain.
After adjusting for inflation of 0.4%, after-tax incomes slipped 0.1% in June. It was the first drop in real disposable incomes since February.
Over the second quarter, income rose at a 3.4% annual rate, up from a sharp 8.2% drop in the first three months of the year.
Real spending increased 0.1% for the third straight month.
Inflation stops falling
The personal-consumption expenditure index, which Federal Reserve officials say is a more accurate gauge of inflation than the better-known consumer price index, rose 0.4% on the month. The core rate of inflation, which excludes food and energy prices, rose 0.2%, as expected.
In the past year, the PCE price index has risen 1.3%, up from a 1.1% gain in May and a low of 0.9% in April.