Economy

Consumer spending and their incomes were unexpectedly flat in June, with Americans opting to save their money as the sluggish job market weighs on the economic recovery. 

Personal incomes went unchanged for the first time in nine months, as Americans saved at the highest rate in a year, the Commerce Department reported Tuesday. 

Consumer spending also stagnated in June, the third straight month of weak demand, as the nation's economic recovery slowed during the year's second quarter. 

Economists had forecast a slightly better result than zero for consumer spending after a 0.1 percent rise in May that followed a revised 0.1 percent drop in April.

Federal Reserve Chairman Ben Bernanke expects consumer spending to pick up at a modest pace during the next several quarters as incomes increase and credit becomes more available. 

A sluggish job market has continued to drag down consumer confidence, leaving the economy with “a considerable way to go” until a full recovery is reached, Bernanke said Monday during a speech in Charleston, S.C. 

He estimated it will take a "significant amount" of time to restore about 8.5 million jobs lost during the recession.

"After a precipitous decline in late 2008 and early 2009, the U.S. economy stabilized in the middle of last year and is now expanding at a moderate pace," he said.

Growth cooled in the nation's manufacturing sector in July for the third straight month.

The manufacturing index fell to 55.5 last month from 56.2 in June, still above analysts' expectations but reflecting an economy that is growing more slowly, according to the Institute for Supply Management on Monday. Any reading above 50 indicates expansion.

During the past several months, the manufacturing sector has bolstered the economic recovery as the job market has struggled to expand. 

The July employment report is set for release on Friday.

Two senior Democrats trumpeted a new report showing six months of manufacturing job growth but noted the recovery is "fragile."

Construction spending unexpectedly rose 0.1 percent in June, propelled by an increase in public construction spending.

The 0.1 percent increase is 7.9 percent below the June 2009 estimate of $907.7 billion, according to Commerce Department figures released Monday. May figures were revised and showed a 1 percent drop that was larger than expected.

During the first six months of 2010, construction projects are 11.2 percent below the same period last year.

Government spending on construction was up 1.5 percent, to $308.4 billion, with highway construction coming in 0.1 percent above the May estimate.

Former Federal Reserve Chairman Alan Greenspan cautioned Sunday that a "very distorted economy" was showing recovery in relatively few areas.

The U.S. economy's growth slowed to a 2.4 percent annual rate from April through June, below analysts forecasts as consumers spent less. 

The figure follows a revised 3.7 percent growth rate in the first quarter, up from the 2.7 percent previously reported, the Commerce Department reported Friday. 

Business investment and exports bolstered the number whereas consumer spending, which accounts for the majority of economic activity, grew only 1.6 percent in the second quarter.

Voters should attribute some blame to the debt crisis in Europe for the lower-than-expected growth numbers this quarter, a top Democrat on financial issues said Friday.

Rep. Barney Frank (D-Mass.), the chairman of the House Financial Services Committee, said that the European crisis in recent months was in part a reason for the figures released this morning showing that Gross Domestic Product (GDP) grew by 2.4 percent between April and June.

"The concerns about the European economy clearly slowed us down," Frank said during an appearance on MSNBC.

"[T]he concern over Europe slowed us down, and I'm hoping now that we will be resuming growth," Frank said.

The figures reflected a slowdown in the rate of recovery after the economy grew 3.7 percent in the first quarter, and 5.7 percent at the end of 2009.

The numbers also aren't of political help to the Obama White House, which has been dogged by high jobless numbers in an election year. President Obama will travel to Detroit today to defend his stewardship of the economy, in particular his administration's decision to extend assistance to the American auto industry.

Several members of the European Union had to receive outside assistance after high debt levels put them on the brink of collapse. Fears of default roiled the Euro and global financial markets, causing fear that a second financial crisis could spread globally.

In the United States in particular, the prospect of another financial crisis spurred fears of a so-called "double-dip" recession, where the economy would again begin to shrink.

Legislation passed by the House Wednesday would name all lobbying law violators for the first time.



In addition, the bill — sponsored by Rep. Mary Jo Kilroy (D-Ohio) — would set up a Justice Department taskforce to investigate cases referred to it by the House Clerk for potential violations of the Lobbying Disclosure Act (LDA).



“When Americans on Main Street try to cheat or break the law, there are repercussions; but for years, there was no way to hold lobbyists accountable for games they play with their disclosures,” Kilroy said in a statement Wednesday. “The Lobbying Disclosure Enhancement Act establishes a task force that will go after lobbyists who engage in shoddy reporting practices and hide behind ignorance of the law.”



Under current law, the lobbyists and firms in LDA cases are never disclosed to the public. If Kilroy’s bill becomes law, all of the lobbyists and firms referred to federal investigators would be named. 



Under Kilroy’s bill, the Justice task force would also study the feasibility of collecting funds from lobbyists to help with LDA enforcement. In addition, they task force may propose legislation to lawmakers on how to toughen up the lobbying law. 



Originally, the bill would have charged lobbyists new fees to improve enforcement of the law. Instead, the taskforce has been authorized to receive funding and will have to find it through the normal appropriations process. 



The original fee provision was removed because of concerns by the House Clerk on how the office would administer the new fee system, according to a Kilroy aide. 

The bill passed the House on a unanimous voice vote Wednesday. 



Lobbyists often run afoul of the LDA, filing late forms or simply not understanding the act’s requirements. According to the Senate Secretary, the office has referred 8,729 cases of potential LDA violations to the U.S. Attorney for the District of Columbia. 

New claims for unemployment benefits fell last week, signaling an easing of layoffs but still reflecting a weak job market. 

First-time claims dropped by 11,000 to a seasonally adjusted 457,000, as the economy continues its slow recovery, the Labor Department said Thursday.

During the past few weeks, claims hit their lowest level since September 2008 as factories remained open during the summer months. 

General Motors and other manufacturers had reported fewer temporary layoffs but those changes have evaporated from the data, according to a Labor Department analyst.