Consumers enjoyed a healthy increase in income in June, but that didn’t get them to open their wallets, according to a government report released Tuesday.
Income rose 0.5% from the prior month, according to the report from the Commerce Department, the best improvement in paychecks since March. Economists surveyed by Briefing.com had forecast a 0.4% rise.
But spending by consumers remained unchanged, and the May reading was revised to a 0.1% drop from being flat. Economists had expected a 0.1% increase in June.
Controlling for inflation, spending actually fell 0.1% in the latest reading.
Income and spending are both important to the nation’s overall economic health. Spending by consumers makes up more than two-thirds of the nation’s economic activity. While the increase in income is a good sign, the reluctance of consumers to spend could keep economic growth weaker than had been hoped.
Other government readings on retail spending have shown a steady decline for the last several months, driven partly by the drop in gasoline prices, which has allowed consumers to hang onto more of their income. While gas prices have started to rise again in recent weeks, that rise happened after this latest economic reading was taken.
The combination of rising income and no spending growth helped to improve the nation’s savings rate, lifting it to 4.4% from 4% in May.
