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Income Growth, Spending Weak in May

The slowdown in income growth is attributed to the weak increase in jobs last month.Government data released today show that personal income growth slowed sharply in May while spending did not increase at all.
The Commerce Department said personal incomes rose just 0.2% last month, far below the 0.6% increase in April. Commerce ascribed the disappointing increase to the weak growth of jobs last month.
Consumer spending, which accounts for two-thirds of total economic activity, was unchanged in May following a 0.6% rise in April. The flat spending was attributed to unusually cold weather in May that caused retail sales to decline for the first time since last August.
Disposable incomes rose by 0.2% in May, compared to a 0.5% increase in April. The personal savings rate edged up slightly to 0.6% of disposable income, compared with 0.5% in April.
In a second report, the department said that America”s net debtor position rose 15.2% in 2004, underscoring the deterioration in the country’s international balance sheet. This reflects last year’s record trade deficit, which is being financed by foreigners owning larger amounts of U.S. assets.
In a third report, the Labor Department said the number of Americans filing new claims for unemployment benefits fell by 6,000 last week to 310,000. The decline in filings was the second in two weeks.

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