After a weak July the U.S. consumer spending and personal income picked up pace in August while inflation remained flat, the Commerce Department
reported Monday.
The U.S. Department of Commerce reported today that the personal income in U.S. increased $47.3 billion or 0.3 percent in August. Personal consumption expenditures (PCE) increased $57.5 billion, or 0.5 percent. Consumer spending is the main engine for the U.S. economy.
The reported 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 to The Christian Science Monitor.
The savings rate dipped to 5.4 percent from 5.6 percent. Personal saving was $705.3 billion in August, compared with $730.5 billion in July.
Inflation remained well below the Federal Reserve's longer term 2.0 percent target. In fact it has undershot the Fed's target for 28 consecutive months. The personal consumption expenditures price index, the Fed's preferred measure, fell to an annual rate of 1.5 percent from 1.6 percent in July.
Economists had expected spending to increase by about 0.4 to 0.5 percent. Economists surveyed by The Wall Street Journal had predicted
spending would rise 0.5 percent and income would rise 0.3 percent.
"We have to expect a correction in September auto sales, so we look for real consumption to drop by about 0.2 percent," said Ian Shepherdson of Pantheon Macroeconomics.
The increasing incomes and the situation at the job market should help to improve the retail sales. But this is not the case so fare. "An economic debate going is why with the 200k+ monthly job gains seen on average over the past 6 months is there not a bigger improvement in retail sales and part of that is due to the higher savings rate," Peter Boockvar, managing director at the Lindsey Group, said.
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