U.S. consumer spending and incomes were unexpectedly flat in June while personal savings were the highest in a year, implying an anemic economic recovery for the remainder of this year.
The Commerce Department said on Tuesday spending was unchanged after rising 0.1 percent in May.
Analysts polled by Reuters had expected consumer spending to rise 0.1 percent in June after May’s previously reported 0.2 percent increase.
"It seems to be consistent with the near-term slowing of the pace of the recovery,” said Scott Brown, chief economist, at Raymond James & Associates in St. Petersburg, Florida.
U.S. stock index futures extended losses after the report, while Treasury debt prices were steady at higher levels. The U.S. dollar was lower against the euro.
Sluggish consumer spending contributed to a slower 2.4 percent economic growth pace in the second quarter, government data showed on Friday. The economy expanded at a 3.7 percent rate in the first three months of this year.
The economy is crawling out of its longest and deepest recession since the 1930s. Although it has now grown for four straight quarters, the recovery has been tepid by historical standards, making little impact on stubbornly high unemployment.
"We’re still dealing with a stunningly high unemployment rate and very little job growth so it shouldn’t be much of a surprise that spending patterns are looking soft,” said Tom Porcelli, U.S. economist at RBC Capital Markets in New York.
In June, spending adjusted for inflation rose 0.1 percent after gaining 0.2 percent in May. Real spending on services edged up 0.1 percent, while spending on goods rose 0.2 percent, the Commerce Department said.
Personal income was flat after increasing 0.3 percent in May. It was the first time since September that incomes had not risen. Markets had expected income to rise 0.2 percent in June from a previously reported 0.4 percent rise in May.
Real disposable income increased 0.2 percent after rising 0.4 percent the prior month. The saving rate was 6.4 percent, the highest since June last year, from 6.3 percent in May. Savings rose to an annual rate of $725.9 billion, the highest level since June last year.
The report also showed the personal consumption expenditures price index, excluding food and energy, rising 1.4 percent in the 12 months to June. That was the slowest increase since September.
The index, a key inflation measure monitored by the Federal Reserve, rose 1.5 percent in May.
