Federal Reserve Chair Janet Yellen gathers her papers at the conclusion of a news conference at the Federal Reserve in Washington, Wednesday, June 18, 2014. (AP Photo/Susan Walsh)
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The price measure tracked by the central bank rose 1.8 percent in May from a year earlier, the biggest 12-month gain since October 2012, and just shy of policymakers' 2 percent goal, data showed Thursday. After adjusting for inflation, consumer spending dropped for a second consecutive month. Wages and salaries have increased 2.5 percent year-on-year on average since the last recession, compared with 4.3 percent in the previous expansion. Consumer spending, which accounts for almost 70 percent of the economy, has grown an average 2.2 percent in this recovery, lagging behind the 3 percent advance in the prior one. Yesterday's consumer spending report showed clothing purchases dropped 0.9 percent in May from the prior month after adjusting for inflation.Forty-nine percent of consumers in a June survey by RBC Capital Markets LLC in New York said they would need an increase in wages to step up spending, up from 46 percent a year ago.This year, 6 percent cited gains in stock prices and 3 percent pointed to rising home values.Yellen said she remains confident consumer spending will continue to grow at a "healthy rate".
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