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Fall in US wages to affect consumer spending

Fall in US wages to affect consumer spending article image
The US Department of Commerce has flagged a fall in US incomes as a possible obstacle to the economy's recovery, warning there is likely to be a corresponding fall in consumer spending. Official data released yesterday showed that incomes dropped by 1.3 percent in June after recording a 1.3 percent increase in May due to stimulus payments. The fall was greater than the expected one percent drop. The US Government is concerned that falling wages, lower returns on investment and an increase in unemployment will hinder economic recovery as consumer spending accounts for about two-thirds of US output. The department will release data on jobs later this week, with the unemployment rate expected to have hit 9.6 percent in June.

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