Consumer spending fell sharply in June as fuel prices continued to put a crimp in discretionary purchases and amid overall concern about the economy, the government reported today.
The Commerce Department said consumer spending fell .7 percent in June, the largest single-month drop in three years and much more than analysts had expected. Spending had risen 1 full percentage point in May.
Leading the decline was spending on automobiles and other big-ticket items. The so-called durable goods spending plunged 5.9 percent, after rising more than 3 percent in May.
A relative lull in job growth in June also may have contributed to consumers being more reluctant to make purchases.
July job numbers are due to be released on Friday, but private outplacement firm Challenger, Gray & Christmas released a report saying the number of announced job cuts rose in July by 8 percent over June levels.
The spending figures and yet another jump in oil prices to fresh record highs converged to send stock markets lower today.
All major markets finished the day in the red, with the Dow losing 58.92 to 10,120.24, the Nasdaq shedding 32.67, or 1.7 percent, to close at 1,859.42 and the S&P off 6.93 points to 1,099.69.
Record Highs for Oil
Oil prices continue to be a hurdle for investors as well as consumers.
After spiking to record levels yesterday, oil futures again broke through the $44 barrier today, closing in New York at $44.15, the highest closing price since oil futures began trading in 1983.
Stoking the price hikes is concern that suppliers will not be able to keep pace with demand, which continues to rise despite the recent price hikes.