The stock market's five-day climb was halted today by government reports showing consumer spending plunged in June and personal incomes didn't grow at all after inflation and taxes were taken into account.
July wasn't much better based on auto sales figures revealing both General Motors and Ford sold fewer cars last month than they did a year ago.
The numbers caused discomfort on Wall Street -- and probably the White House as well -- because they indicted economic growth is not bouncing back as had been expected.
Federal Reserve Board Chairman Alan Greenspan recently testified that the economy was doing fine but has simply hit a "soft patch."
That soft patch "now appears to be deeper and wider than anyone had any reason to suspect," economist Charles W. McMillion, president of MBG Information Services told The Washington Post's Nell Henderson.
Ford and General Motors stocks slipped even though the two big automakers tried to put the best face on the numbers by pointing out that July was the best sales month so far this year -- just not as good as the blockbuster July they had last year.
Nonetheless, General Motors cranked up its sales incentives to a record $6,000 on some vehicles -- including the Envoy and Suburban sport utility vehicles. The top discounts will be offered to customers who finance their cars through General Motors Acceptance Corp.
The problem for the auto industry is that carmakers are trying to boost sales at a time when consumers are cutting their spending and many have less money. Consumer spending was clipped by rising energy prices, which today hit another new all time high with crude oil closing at $44.15 a barrel on the New York Mercantile Exchange.
Consumer spending fell 0.7 percent in June -- the sharpest drop since September, 2001, when consumer reacted to the terrorist attacks, the Commerce Department reported. Personal income rose by 0.2 percent, but actually was flat when adjusted for taxes and inflation.
The Dow Jones industrial average and the Standard & Poor's 500 stock index -- both coming off five-day winning streaks -- fell in unison, both losing about half of 1 percent. The Dow lost 59 points, closing at 10,120.24. The S&P fell 7 points to 1,099.69.
The Nasdaq Stock Market composite index took a nastier fall, slipping closer to 2 percent, down 33 points to 1,859.42.