US consumer spend­ing up weak 0.1 per­cent in Au­gust


WASH­ING­TON — Con­sumers barely boosted their spend­ing in Au­gust, a sign that over­all eco­nomic ac­tiv­ity could be weaker this quar­ter.

Consumer spend­ing rose just 0.1 per­cent, fol­low­ing a much larger 0.3 per­cent ad­vance in July, the Com­merce Depart­ment re­ported Fri­day. It was the small­est gain since June. The Au­gust weak­ness re­flected a big drop in sales of durable goods such as au­tos.

In­come growth slowed to a gain of just 0.2 per­cent. Wages and salaries, the big­gest com­po­nent, showed no gain at all af­ter strong in­creases in June and July.

The over­all econ­omy, as mea­sured by the gross do­mes­tic prod­uct, grew at a ro­bust an­nual rate of 2.1 per­cent in the April-June quar­ter. But many economists be­lieve growth has slowed in the cur­rent July-Septem­ber quar­ter, re­flect­ing the im­pact of a string of dev­as­tat­ing hur­ri­canes and the sub­se­quent slow­down in consumer spend­ing, which ac­counts for nearly 70 per­cent of eco­nomic ac­tiv­ity.

Some an­a­lysts say GDP growth could be as low as a 2 per­cent an­nual rate in the third quar­ter. They are, how­ever, ex­pect­ing a re­bound in the fi­nal three months of the year, helped in part by spend­ing on re­build­ing af­ter the hur­ri­canes.

The per­sonal sav­ing rate was un­changed at 3.6 per­cent of af­ter-tax in­comes in Au­gust, the same as July. Both months rep­re­sented the low­est sav­ing rate since a 3.2 per­cent read­ing in De­cem­ber.

A measure of in­fla­tion closely watched by the Fed­eral Re­serve posted a slight 0.2 per­cent in­crease. Over the past 12 months it is up 1.4 per­cent, still far be­low the Fed’s 2 per­cent tar­get.

The rise in consumer prices from a year ago has been the same for the past three months and rep­re­sents more than five years that prices have been be­low the Fed’s 2 per­cent in­fla­tion tar­get. Last month the Fed kept its key in­ter­est rate un­changed, but still sig­naled that it be­lieved it could raise rates for a third time this year.

Many economists, how­ever, be­lieve the Fed will not boost rates again this year un­less in­fla­tion be­gins mov­ing back to­ward the 2 per­cent goal. Fed Chair Janet Yellen in a speech ear­lier this week ac­knowl­edged that the Fed is puz­zled by the per­sis­tence of unusu­ally low in­fla­tion and said the cen­tral bank may have to ad­just the tim­ing of fu­ture rate hikes if its be­lief that the slow­down is only tem­po­rary proves in­cor­rect.


Ve­hi­cle shop­per Mary Jean Jones speaks with Mark Miller Toy­ota sales­man Doug Lund in Salt Lake City in June. Con­sumers barely boosted their spend­ing in Au­gust, a sign that over­all eco­nomic ac­tiv­ity could be weaker this quar­ter, ac­cord­ing to in­for­ma­tion re­leased Fri­day by the Com­merce Depart­ment.

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