Higher prices are driving up spending, as disposable income and personal savings continue to decline.
Following sharp increases in recent months, personal income growth eased in June, as higher prices continued to cut into savings, the Commerce Department reported Monday.
Personal income rose by 0.1 percent in June, down from 1.8 percent the previous month, the report said. Service-sector employers added $9.9 billion to payrolls, compared to $16.2 billion in May, while goods producers added $1.2 billion.
At the same time, higher prices drove up spending by 0.6 percent, while disposable income declined by 1.9 percent. Savings, measured as a percent of disposable income, were also down, dropping from 4.9 percent to just 2.5 percent.
In June, small-business owners cited "backdoor inflation" from rising payroll costs as a top business concern for the first time since the early 1980s, according to the National Federation of Independent Business. A growing number reported higher employee compensation costs as a source of weaker profits, the Washington D.C.-based lobby group said.