U.S. consumer spending and prices rose moderately in June, pointing to slower ec...
WASHINGTON - U.S. consumer spending and prices rose moderately in June, pointing to slower economic growth and benign inflation that could see the Federal Reserve cutting interest rates on Wednesday for the first time in a decade.
But a strong labor market and signs that the economy was not slowing abruptly have significantly reduced the probability of the Fed reducing borrowing costs by 50 basis points, as anticipated by financial markets earlier this month. President Donald Trump, who has been critical of the Fed, on Tuesday repeated his call for “a large cut.”
Robust consumer spending blunted some of the hit to GDP from weak exports, business investment and a slowdown in inventory accumulation. The economy grew at a 2.1% rate last quarter, pulling back from the first quarter’s brisk 3.1% pace. The dollar was little changed versus a basket of currencies, with investors on the sidelines ahead of the Fed’s rate decision. U.S. Treasury prices dipped and stocks on Wall Street were trading down.When adjusted for inflation, consumer spending gained 0.2% in June. This so-called real consumer spending rose 0.3% in May. Last month’s small gain in core consumer spending likely sets up consumption for a step-down in the third quarter after the robust growth recorded in the April-June period.
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