U.S. consumer spending up 0.3 percent in August
WASHINGTON — U.S. consumer spending edged up a moderate 0.3 percent in August as sales of cars and other durable goods fell. A key gauge of inflation slowed slightly after its biggest annual gain in six years.
The rise in spending represented a slowdown from gains of 0.4 percent in both June and July, the Commerce Department reported Friday. Consumer spending is closely watched because it accounts for twothirds of economic activity.
The government reported Thursday that the overall economy, as measured by the gross domestic product, grew at an annual rate of 4.2 percent in the April-June quarter, the best in nearly four years.
However, GDP is expected to slow in the second half of this year to around 3 percent. That pace would still be solid enough to boost growth for the full year to 3 percent, the best annual performance in 13 years.
Economists said that they expected low unemployment to keep consumer spending growing at a solid pace for the rest of this year and into next year.
“Improving household finances, fueled by solid wage gains and lower personal tax rates, will help bolster consumer spending for several quarters,” said James Bohnaker, associate director of the economic consulting firm IHS Markit.
An inflation gauge closely watched by the Federal Reserve edged up 0.1 percent in August, a tiny gain that left prices rising 2.2 percent over the past 12 months, down from a 2.3 percent 12-month rise in July which had been the fastest pace in six years.
The inflation slowdown will be welcomed at the Federal Reserve, which raised its policy interest rate Wednesday.
Core inflation, which excludes energy and food, was up 2 percent for the 12months ending in August. It has been at that level for the last 12 months.