Americans spend at weakest pace in 20 months

The pace at which Americans spent in May was the weakest in 20 months, a sign that high gas prices and unemployment are holding back the economy. Consumer spending was unchanged, the Commerce Department says. That was the worst result since September 2009 because, when adjusted for inflation, spending actually dropped 0.1%. April’s consumer spending figures were revised to show a similar decline when adjusted for inflation. It marked the first decline in inflation-adjusted spending since January 2010. Incomes rose 0.3% for the second straight month. But adjusted for inflation, after-tax incomes increased only 0.1% in May, after falling by the same amount in the previous month. Stock futures fell immediately after the report was released. Dow futures plunged 115 points. The spike in gas prices has forced many consumers to cut back on discretionary purchases, such as furniture and vacations, which help boost growth. Fewer jobs and high unemployment have left workers with little leverage to ask for raises. And slow wage growth hurts the broader economy because consumers have less money to spend.