Wall Street Journal (06/26/14) Josh Mitchell

Weak consumer spending in May despite stronger income growth raises doubts about the economy’s underlying strength. Personal spending increased 0.2% in May from a month earlier, according to the U.S. Department of Commerce, entirely due to higher prices and following a flat reading in April. Adjusted for inflation, spending declined.

“This report seems to present the [U.S. Federal Reserve] with the dreaded conflict between its objectives: slower economic growth but faster inflation,” says economist Michael Moran of Daiwa Capital Markets America. “Consumer spending has hit an air pocket, but with the job market improving, activity should pick up.”