Spending in June stagnates despite lower gas prices

Consumers pocketed the cash they saved from lower gas prices in June rather than spending it, according to government data released Tuesday, raising worries about the health of the economic recovery.

The Commerce Department reported that consumer spending remained stagnant in June and helped tamp down growth during the second quarter to a tepid 1.3 percent, below expectations . Meanwhile, income growth barely budged by a mere 0.1 percent, constrained by the tight job market.

"Consumers were not in the spending mood when the quarter began, and they weren't a spending mood when the quarter ended," said Stuart Hoffman, chief economist for the PNC Financial Services Group. "It was just a flat line."

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Lori Montgomery 03 Aug, 2011

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