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Even though wages didn't rise, Americans had more money to spend in May. After deducting taxes and adjusting for inflation, income rose 0.3 percent
-- the biggest monthly increase for that category in two years. It largely reflected the sharp drop in gas prices that has lowered inflation. Prices tied to consumer spending fell 0.2 percent in May, the biggest drop since June 2010. Excluding volatile food and energy, prices were up a slight 0.1 percent in May and have increased 1.8 percent over the past 12 months. That's below the Fed's 2 percent target for inflation, which gives the Fed more leeway to take steps to boost the economy. The saving rate increased to 3.9 percent of after-tax income in May. That's up from 3.7 percent in April and the highest level since January. Gas prices have fallen sharply since peaking in early April at a national average near $4 per gallon. The nationwide average for a gallon of regular was $3.37 on Thursday, according to AAA's daily fuel gauge report. If gas prices stay low, Americans will have more money to spend this summer on other goods, from autos and furniture to electronics and vacations, that fuel economic growth. Gasoline purchases tend to provide less benefit for the U.S. economy because some of the money goes to oil-exporting nations. Consumer confidence fell in June for the fourth straight month, according to a closely watched survey from the Conference Board. Worries about the job market have outweighed the benefits of cheaper gas and a gradually improving housing market. Employers added an average of only 73,000 jobs a month in April and May. The followed three months when the economy created an average 226,000 jobs a month. The weak job market was a key reason the Federal Reserve last week downgraded its outlook for growth this year. It now expects growth of between 1.9 percent and 2.4 percent in 2012
-- half a percentage point lower than its April forecast.
[Associated
Press;
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