US incomes rose at the lowest rate in over a year during June, the government said today, while inflation showed signs of picking up speed.
Personal incomes barely edged up 0.1% after rising 1.8% in May, the latest figures from the Commerce Department show. It was the smallest rise in personal incomes since April 2007, when they were flat.
The tiny rise in incomes came as government stimulus payments eased to $27.9 billion in June from $48.1 billion in May. The department said that except for the stimulus payments, disposable incomes would have shrunk in June.
Incomes are under stress as job markets wither, and a separate report today from employment consulting firm Challenger, Gray & Christmas underlined the fact that employment prospects are likely to get worse.
It said planned layoffs at US companies jumped 26% in July from June. Layoffs that were planned totaled 103,312 in July, compared with June's 81,755, the survey found.
The Commerce Department said consumer spending rose 0.6% in June after gaining 0.8% in May. However, after accounting for inflation, spending fell 0.2%.
Spending accounts for about two-thirds of national economic growth but there is a question whether consumers will be able to keep spending more.
Meanwhile, the personal consumption expenditures price index rose 4.1% on a year-over-year basis in June - the highest since a matching 4.1% in May 1991 and up from 3.5% in May. The core PCE index, which excludes food and energy items, was up 2.3% in June, the highest since a matching rate last December, after rising 2.2% in May.
That is likely to be worrying for US Federal Reserve policy-makers meeting on Tuesday. The Fed is universally expected to keep key rates unchanged but may signal its concern that prices are beginning to gain steam.