U.S. economy grows at slower pace as consumer spending cools

2Q GDP rose 1.5%

Consumer Slowdown

Recent data signal consumers are reluctant to step up purchases. Retail sales fell in June for a third consecutive month, the longest period of declines since 2008. Same-store sales rose less than analysts’ estimates at retailers including Target Corp. and Macy’s Inc.

Slowing sales and currency fluctuations led Procter & Gamble, the world’s largest consumer products company, to cut profit forecasts three times this year.

Among frugal consumers is Roger Szemraj, a lobbyist for the food industry with OFW Law in Washington, who drives a hybrid car and said his routine has always been to find the grocery store with the best deals.

“We are always looking to see what are the sales items and try to buy in that instance,” said Szemraj who was shopping at Safeway Inc. store in the Georgetown neighborhood of Washington because of a sale on lamb. “It’s a matter of looking to see what the sales price is.”

Payroll Gains

Consumers may remain cautious until hiring accelerates. Payroll gains averaged 75,000 in the second quarter, down from 226,000 in the prior three months and the weakest in almost two years. The unemployment rate, which held at 8.2 percent in June, has exceeded 8 percent for 41 straight months.

Bernanke told lawmakers last week that progress in reducing the jobless rate probably will be “frustratingly slow.”

“Economic activity appears to have decelerated somewhat during the first half of this year,” Bernanke said in testimony to Congress. The Fed is “prepared to take further action as appropriate to promote a stronger economic recovery.”

Jobs and the economy are central themes in the presidential campaign, with President Barack Obama and Republican challenger Mitt Romney sparring over who can best revitalize the recovery.

UPS, the world’s largest package-delivery company, cut its full-year profit forecast after a drop in second-quarter international package sales. The Atlanta-based company, considered an economic bellwether because it moves goods ranging from financial documents to pharmaceuticals, projects the U.S. will grow 1 percent in the remainder of 2012.

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