U.S. Economy: Consumer Spending Cooled in August as Wages Fell

Consumer spending slowed in August as incomes dropped for the first time in almost two years, showing scarce jobs are preventing the U.S. economy from gaining ground.

Purchases rose 0.2 percent after a 0.7 percent increase the prior month, and earnings decreased 0.1 percent, according to Commerce Department figures today in Washington. Other reports indicated business activity unexpectedly accelerated this month, while consumer sentiment held near an almost three-year low.

Little hiring, stagnant wages and a plunge in stocks have shaken confidence in the recovery that began two years ago, which may hurt sales at retailers like Best Buy Co. and Target Corp. The sputtering economy has prompted policy makers from President Barack Obama to the Federal Reserve to take additional action in a bid to prevent another recession.

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- Posted: 2011-09-30 11:29:52

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