WASHINGTON (AP) — Consumer spending was flat in May with incomes dropping for a second month as the impact of the government’s pandemic stimulus p

May consumer spending flat; incomes fall and prices jump

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2021-06-25 17:00:10

WASHINGTON (AP) — Consumer spending was flat in May with incomes dropping for a second month as the impact of the government’s pandemic stimulus payments waned. Inflation, however, posted a sizable gain with prices excluding food and energy jumping by the largest amount in nearly three decades.

The flat reading for consumer spending in May represented a marked slowdown following gains of 0.9% in April and a 5% surge in March, the Commerce Department reported Friday. The spending surge in March had been fueled by distribution of payments of up to $1,400 per individual from a $1.9 trillion stimulus bill, the Commerce Department reported Friday.

With those payments winding down, incomes fell by 2% in May after an even bigger drop of 13.1% in April. Wages and salaries, the key component of income, were up 0.8% in May, reflecting rising employment levels.

Inflation tied to a gauge of consumer spending that is closely watched by the Federal Reserve increased 0.4% in May and is up 3.9% over the past 12 months. That was the largest 12-month increase since 2008 and well above the Fed’s 2% target for annual price increases.