Subscribe

Consumer spending and personal income speed up in August

Consumer spending and personal income grew in August, a positive sign for the US economy which appears to have shifted into a higher gear. Consumer spending rose 0.5 percent last month after being unchanged in July, and personal income ticked up 0.3 percent. 

  • close
    A cashier hands a customer his change and receipt during a transaction at a Sears store, in Henderson, Nev. The Commerce Department said on Monday, Sept. 29, 2014 that consumer spending rose 0.5 percent last month after being unchanged in July. Growth in personal income ticked higher to a 0.3 percent gain
    Julie Jacobson/Reuters/File
    View Caption
  • About video ads
    View Caption
of

American consumers spent more in August, a positive sign for the U.S. economy which appears to have shifted into a higher gear.

The Commerce Department said on Monday consumer spending rose 0.5 percent last month after being unchanged in July. The growth in August was just above the median forecast in a Reuters poll of a 0.4 percent gain.

"(The data) is a further signal that the positive momentum in domestic activity is being sustained," said Millan Mulraine, an economist at TD Securities in New York.

Even after adjusting for inflation, spending was 0.5 percent higher, the biggest gain since March. Growth in personal income ticked higher to a 0.3 percent gain, in line with forecasts. Some of the strength in spending came from a decrease in the saving rate, which eased back from a 1-1/2-year high in July.

The data reinforces the view that the U.S. economy will finish this year firing on nearly all cylinders, and the dollar pared an earlier decline following the report's publication.

Most investors are betting the U.S. Federal Reserve could raise interest rates next year to keep inflation in check, though Monday's data gave little sign of growing price pressures.

The Fed's preferred gauge of inflation was up 1.5 percent in August from a year earlier, down slightly from the reading in July, the Commerce Department data showed. A measure of underlying price pressures which strips out food and energy held at 1.5 percent. That reading had dipped to 1.2 percent earlier this year.

Some policymakers at the U.S. central bank remain concerned that inflation remains stuck well below their 2 percent target. Chicago Fed President Charles Evans said on CNBC television on Monday that the Fed should patiently seek to push inflation up to its target so it doesn't have to "backtrack" after raising rates.

Data on Friday showed the U.S. economy grew at its fastest pace in 2-1/2 years in the second quarter with all sectors contributing to the jump in output.

Relatively strong consumer spending during the period was taken as a sign the economy's recovery from the 2007-09 recession is becoming more durable. 

About these ads
Sponsored Content by LockerDome
 
 
Make a Difference
Inspired? Here are some ways to make a difference on this issue.
FREE Newsletters
Get the Monitor stories you care about delivered to your inbox.
 

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK