May income up slightly, consumer spending flat

Workers in the U.S. saw a slight increase in their pay in the month of May, but that boost did not translate into much in the way of increased spending.

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Personal income increased nationwide by $36.2 billion last month, or 0.3 percent, according to new data released by the Commerce Department. That growth came in slightly below economists’ expectations of 0.4 percent growth. In April, income rose $37.7 billion or 0.3 percent.

However, as concern about the economy is growing, it appears that the public is holding onto more cash. Consumer spending as gauged by personal consumption expenditures (PCE) was effectively flat in May. Spending, which represents 70 percent of the economy, rose just $4.6 billion in May, which translates to an increase of less than 0.1 percent. In April, spending grew by $28.8 billion, or 0.3 percent.

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The new data comes as policymakers air fresh concerns about the slowing of the economic recovery. On Wednesday, the Federal Reserve lowered its expectations for economic growth in 2011, and Fed Chairman Ben Bernanke acknowledged that “some of these headwinds may be stronger or more persistent than we thought.”