U.S. Income Takes A Drop During May

Americans’ income in May slipped for the first time in a year, and a drop in construction spending was the steepest in four years.

But analysts said Monday’s gloomy pre-holiday reports - just two days before a key Federal Reserve meeting on interest rates - suggest anemic growth and not a recession. They also noted that consumer spending was surprisingly strong in May, brightening the generally pessimistic picture.

The Commerce Department said personal income fell 0.2 percent in May, the first decline since a 0.6 percent drop in January 1994. Income rose 0.1 percent in April.

But spending, which has slowed dramatically in 1995 from last year’s booming pace, rose a strong 0.7 percent after a tepid 0.1 percent gain in April. Consumer spending accounts for two-thirds of the nation’s economic activity.

The government also reported that construction spending fell 1.5 percent in May.