Consumer spending weakest in months
Auto sales drop, August slowdown not expected to last
WASHINGTON — U.S. consumers scaled back their spending in August to its weakest pace in five months, reflecting a drop in spending on autos. Income growth also decelerated as wages and salary gains slowed following four strong months.
Consumer spending was unchanged in August after solid gains of 0.4 percent in July and 0.3 percent in June, the Commerce Department reported Friday.
It was the poorest showing since a similar flat reading in March.
Personal incomes rose 0.2 percent last month, half the gain in July. It was the weakest showing since a 0.1 percent drop in February. Wages and salaries, the big- Consumer spending was unchanged in August after solid gains in July and in June. gest income category, were up 0.1 percent after two months of 0.5 percent increases.
The August spending slowdown is expected to be temporary.
Economists are counting on consumers to help lift the economy to growth, as measured by the gross domestic product, of around 3 percent in the current JulySeptember performance. That would be a significant improvement from anemic growth that has averaged just 1 percent over the past three quarters.
“Consumers t ook a breather in August,” said Chris Christopher, director of consumer economics at Global Insight. “Personal
Stocks rise as banking sector recovers
NEW YORK — U.S. stocks climbed Friday as banks made a rapid recovery following a steep fall a day ago.
Energy companies also rose as the price of oil continued to move higher, and strong earnings from Costco sent consumer stocks higher.
The Dow Jones industrial average jumped 164.70 points, or 0.9 percent, to 18,308.15. The Standard & Poor’s 500 index rebounded 17.14 points, or 0.8 percent, to 2,168.27. The Nasdaq composite rose 42.85 points, or 0.8 percent, to 5,312.
Benchmark U.S. crude oil rose 41 cents to $48.24 a barrel in New York, and it rose 8 percent over the last three days. spending was flat after four months of rather sizable gains.”
Christopher said one factor in the slowdown may have been a decision by parents to delay part of back-to-school shopping until later in the year when they should be able to get better deals.
Sal Guatieri, senior economist at BMO Capital Markets, said the August result points to a somewhat slower pace for consumer spending in the current quarter.
He said spending growth would likely moderate to an annual rate of around 2.8 percent in the third quarter, down from 4.3 percent growth in the second quarter, which had been the fastest jump since late 2014.
For August, purchases of durable goods fell 1.3 percent, with most of that decline reflecting the falloff in auto sales. Purchases of non-durable goods were down 0.2 percent.
Sales of services, which include utilities, rose 0.3 percent.