Hampel warns Wall St. Journal: Spending will slow

NEW YORK (6/17/08)--Consumer spending and economic growth will slow toward the end of this year and into early next year, Bill Hampel, chief economist at the Credit Union National Association, told The Wall Street Journal Saturday.

"The pressures driving consumer spending down have not gone away at all," Hampel told the newspaper. "It's going to take awhile for the household sector to get out of this. We're looking for the economy to limp along [through mid-2009]."

While food and energy costs continue their upward spiral, prices of other items are being held back by a sluggish economy, which in turn will keep overall inflationary pressures, down, the article said.

The consumer price index rose 0.8% in May and is up 4.2% from a year ago, reflecting rising food, transportation and energy costs, the Labor Department said Friday, according to the article.

However, core prices--which exclude food and energy--went up 0.2% in May and 2.3% over the year. The figures indicated that underlying inflation remains constrained, although it is a little higher than the 1.5%- to-2% range preferred by the Federal Reserve, the article added.

courtesy of cuna.org