U.S. consumer spending jumps 0.5% in August
WASHINGTON (MarketWatch) - Consumer spending rebounded toward the end of the summer as Americans boosted outlays by 0.5% in August after no change in July, suggesting the economy continued to grow at a moderate pace in the third quarter. Consumers spent more on heavy-duty items such autos and less on nondurable goods like gasoline. Durable outlays leaped 1.8% and service spending also rose 0.5%. Spending on nondurables dropped 0.3%. Incomes increased 0.3% last month, as did disposable income, or money left over after taxes. Economists polled by MarketWatch had forecast a seasonally adjusted 0.4% increase in spending and a 0.3% gain in income. Since spending rose faster than incomes, the amount of money individuals save fell to 5.4% from a 20-month high of 5.6% in July. Meanwhile, inflation as gauged by the PCE price index was flat in August, though the core rate excluding food and energy edged up 0.1%. Over the past year the PCE index has risen 1.5%, down from 1.6% in the prior month. Inflationary pressure has cooled off since the late spring, giving consumers a bit more money to spending in real terms. Inflation-adjusted spending also rose 0.5% in August, marking the biggest increase since a 0.6% gain in March. The increase in March was the strongest since the U.S. exited recession in mid-2009. In July, spending was revised up to unchanged from an initial reading of a 0.1% decline.
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