As gasoline prices rose, Americans spent more in June than the previous month — despite falling incomes. For the rest of the year, economists expect falling wages and rising unemployment to act as a drag on spending. Consumer spending is closely watched because it accounts for about 70 percent of total economic activity and has helped lift the economy out of previous recessions. While analysts expect the economy to grow in the second half of this year, consumers aren’t likely to lead the way. Americans boosted their spending 0.4 percent in June, the Commerce Department said Tuesday, the second consecutive monthly increase. But adjusting for inflation, spending fell 0.1 percent, following a flat reading in May. Inflation-adjusted spending hasn’t increased since February, the department said. Personal income, meanwhile, dropped 1.3 percent in June, the eighth straight decline.
Airline performance worsens in June
U.S. airlines in June turned in their worst on-time performance since December, the Department of Transportation said Tuesday. The airlines had a combined on-time arrival rate of 76.1 percent compared with 80.5 percent in May. But the carriers had fewer delayed flights this June than in the same month a year ago. The on-time rate in December was 65.3 percent. The most frequent reasons for flight delays included airport congestion, equipment problems and weather. June was a bad month for severe weather across the nation. The National Weather Service recorded more than 6,400 incidents involving hail and high winds, almost twice the number in May.
Kraft profits rise in quarter
Kraft Foods says its second-quarter profit rose 11 percent although its sales slipped as the impact of the strong dollar weighed down international sales. The earnings beat analyst expectations, and the company boosted its profit guidance for fiscal 2009. The maker of Velveeta, Oreo cookies and Maxwell House coffee said Tuesday it earned $829 million, or 56 cents per share, in the period ending in June. That compares with earnings of $747 million, or 49 cents per share, a year earlier.
SEC may abolish broker flash orders
The Securities and Exchange Commission is moving toward banning a trading practice that gives some brokerages a split-second advantage in buying or selling stocks. SEC Chairwoman Mary Schapiro said in a statement Tuesday that the agency is working to create a rule to ban the trades known as flash orders. Flash orders give certain members of exchanges including Nasdaq, Direct Edge and BATS the ability to buy and sell order information for milliseconds before that information is made public. High-speed computer software can take advantage of that brief period to allow those members to get better prices and profits.
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