Consumer spending in U.S. up in August
Consumer spending in the United States rose in August for a fourth consecutive month as a pickup in incomes supported the biggest part of the economy.
Household purchases, which account for about 70 percent of the economy, climbed 0.3 percent after a revised 0.2 percent advance in July that was higher than previously estimated, the Commerce Department reported Friday. The advance in August matched the median forecast of economists in a Bloomberg survey. Incomes rose 0.4 percent, the most in six months, up from a 0.2 percent July increase.
Rising home values and stock market gains bolstering net worth are cushioning the effects of this year's payroll tax increase and giving households the means to sustain purchases. At the same time, the pace shows little momentum in spending in the third quarter after a second-quarter slowdown.
"The consumer is still in a holding pattern, waiting for better employment prospects," said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit. Still, "I was encouraged to see the improvement in wages and salaries."
Another report Friday showed confidence among consumers declined in September to a five-month low. The Thomson Reuters/University of Michigan final index of sentiment decreased to 77.5 from an August reading of 82.1.
The figures follow a Commerce Department report Thursday that showed the economy grew at a 2.5 percent annualized rate in the second quarter after expanding 1.1 percent in the first three months of the year. Consumer spending increased at a 1.8 percent pace after making a 2.3 percent gain in the first quarter.
Faster job gains would help drive the wage increases needed to boost household purchases. Employers added 169,000 jobs in August, compared with an average 195,000 a month in the first half of the year.
Federal Reserve policymakers said at the conclusion of their Sept. 17-18 meeting they wanted to see more evidence of an improvement in employment and the economy as they unexpectedly decided to continue their record $85 billion in monthly stimulus.