U.S. Consumer Spending Flat in August
September 30 2016 - 8:10AM
Dow Jones News
WASHINGTON—Consumer spending leveled off in August, a sign of
caution among households amid lackluster economic growth.
Personal consumption, which measures how much Americans spent on
everything from new cars to nursery schools, was unchanged in
August from a month earlier, the Commerce Department said on
Friday. That was the weakest reading since March.
Incomes rose 0.2%, the slowest growth since February.
Economists surveyed by The Wall Street Journal had expected
personal spending to rise 0.1% and income to increase 0.2% in
August.
Consumers, buoyed by steady job growth and slowly rising wages,
were the main driver of economic growth in the first half of 2016.
During the second quarter of the year, gains for personal spending
more than outweighed the drag from falling business investment, a
slowdown in government outlays and weakness in home construction
and remodeling.
Economists and policymakers expect consumers to remain a key
support into the final half of the year. Separate surveys have
shown confidence remains high.
But the latest figures suggest some caution and hint at a
slowdown in purchases of autos and other big-ticket items--spending
on durable goods was down 1.3% from a month earlier.
Americans also saved a little more. The personal saving rate
rose to 5.7% in August from 5.6% in July.
Friday's report showed inflation pressures remain muted.
The personal consumption expenditures price index, the Federal
Reserve's preferred inflation measure, rose only 0.1% in August
from the prior month. From a year earlier, the index was up
1.0%.
Inflation has fallen short of the Fed's 2% target for more than
four years. Most recently, it's been held down by low oil and food
prices.
So-called core prices, which exclude the volatile categories of
food and energy, rose 0.2% from the prior month and were up 1.7%
from a year earlier. The year-over-year reading was the strongest
since February.
Fed officials are watching key metrics such as household
spending, inflation and hiring as they weigh another move on the
central bank's benchmark interest rate.
Fed Chairwoman Janet Yellen earlier this week said there is no
fixed timetable to raise rates though if the economy continues
along its current path such a step could come later this year.
When adjusting for inflation, Monday's report showed consumer
spending fell 0.1% in August from the prior month.
Inflation-adjusted disposable personal income--income after
taxes--was up 0.1%.
Write to Jeffrey Sparshott at jeffrey.sparshott@wsj.com and Josh
Mitchell at joshua.mitchell@wsj.com
(END) Dow Jones Newswires
September 30, 2016 08:55 ET (12:55 GMT)
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