Just as Americans begin to examine what President Obama’s health care overhaul is about to do to the U.S. economy, consumer spending reportedly stalled in May for the first time in six months.
Consumer spending, according to the U.S. Commerce Department, was revised downward from .03 percent to .01 percent for the month, according to a CNBC report.
Consumer spending accounts for more than two-thirds of U.S. economic activity and is a major indicator of job growth or a lack thereof. Consumer spending was artificially increased by exceptionally high gas prices at the pump earlier this year but went flat as people paid less to fill their tanks.
"We're seeing consumer spending come off the boil a bit over the last few months. That's to be expected, given uncertainty across the board and the troubling headlines we've seen," said Omer Esiner, chief analyst at Commonwealth Foreign Exchange in Washington.
The Consumer spending report showing 0.1 percent after adjustment for inflation may cause economists to tweak their second-quarter forecasts downward for real consumer spending which is currently in a range of 2 percent to 2.3 percent.
Last month, spending on long lasting goods such as cars fell 0.4 percent after declining 0.2 percent in April. Auto sales bumped up after last year's earthquake and tsunami in Japan left showrooms short of popular models.
Slow income growth in an economy struggling to generate enough jobs factors into the curb in spending. Income rose an anemic 0.2 percent after a similar gain in April. The increase was in line with economists' expectations after a series of disappointing jobs reports.
The amount of income available to households after accounting for taxes and inflation rose 0.3 percent, only slightly better than a 0.1 percent gain posted in April.
Consumer spending mirrors a drop in consumer confidence which hit a five-month low in May.