Con­sumer spending weak­est in months

Auto sales drop, Au­gust slow­down not ex­pected to last

Baltimore Sun - - MARYLAND - By Martin Crutsinger

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.

ELISE AMENDOLA/AP

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