Despite a better-than-expected gain in nominal spending, real personal spending decreased 0.2% for the month of June. Nominal spending increased by 0.6%, above the 0.5% expected by economists. But the increase was mainly due to a sudden spike in prices, as inflation increased 0.8% for the month. Adjusted for inflation, real consumer spending was down, by 0.2 percentage points. The spike in inflation was the worst for a month since 1981- 27 years.
Real spending on durable goods fell 1.6%, the biggest drop in a year, while real spending on nondurable goods slipped 0.4%. Real spending on services rose 0.2%.
Nominal personal incomes grew 0.1% in June, way ahead of expectations. Economists were expecting a 0.1% decrease.
The impact of the tax rebates on personal incomes was reduced in June: After getting $48.1 billion from the government in May, individuals received $27.9 billion.
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