U.S. consumer spending rose at a healthy rate in August, while income growth slowed after a big jump in July, The Associated Press reports.
Consumer spending advanced 0.4% compared to July, when spending also increased by 0.4%, the Commerce Department announced this morning. In both months, the figures reflected strong gains in purchases of durable goods such as autos.
Consumer spending accounts for two-thirds of economic activity, and the latest result supports expectations for it to remain strong in the second half of this year. That should help serve as a buffer against a global slowdown that has hurt American manufacturers.
“Overall consumer spending remains robust and highlights a solid employment backdrop,” says Bricklin Dwyer, an economist at BNP Paribas. “We expect firm spending ahead as employment remains solid and wages begin to accelerate.”
Sal Guatieri, senior economist at BMO Capital Markets, says that the spending gains were broad, with consumers getting a boost in spending power from falling energy prices. He predicts that spending in the current July-September quarter would remain robust at an annual rate above 3%.
Personal income was up 0.3% in August, helped by another solid increase in wages and salaries. The result follows a 0.5% income gain in July, which had been the best showing in eight months.
