Fall in US consumer spending fuels economic worries

US consumers reduce their spending in June for the first time in almost two years.

They are also facing slow grow in income pace for nine months, fuelling further concerns about economic growth.

The US Department of Commerce said spending reduce 0.2% in June, while incomes increase 0.1%.

Paul Dales, of Capital Economics, said it was a further sign that any economic rebound "will be more modest than previously looked likely".

Figures released last week showed that the US economy grew at a modest annual rate of 1.3% in the second quarter of the year.

Higher energy prices and unemployment have reduced household budgets.

The economy added just 18,000 net jobs in June, the miner rise in nine months. Meanwhile, unemployment in June jumped up to 9.2%, the highest rate so far this year.

IMF calls for US to raise debt ceiling and cut spending

 

The IMF has called on US politicians to act urgently to raise the country's debt ceiling.

The IMF also called for a "complete solution" to reduce the US deficit over the medium term.

Without this, IMF directors warned, the markets lose confidence in Washington's ability to pay its debts.

US has not capacity to get more debt because the US risks default on its $14.3tn (£8.7tn) debt.

"These risks would also have significant global repercussions, given the central role of US Treasury bonds in world financial markets," the IMF said.