U.S. Personal Spending Increased More Than Forecast in July
Friday, 30 August 2019 19:48 WIB | ECONOMY |Ekonomi AS
U.S. personal spending accelerated in July, exceeding forecasts and indicating household consumption remained solid at the start of the third quarter and will continue as the economy™s dominant growth engine.
Consumer outlays for goods and services, which account for about 70% of gross domestic product, increased 0.6% during the month after a 0.3% June advance, Commerce Department data showed Friday. The report also showed incomes rose less than forecast, while the Federal Reserve™s preferred inflation gauge remained range bound.
The data indicate Americans are showing scant signs of reining in their spending despite recent concerns about the prospects of cooler economic growth. A report yesterday showed consumption rambled ahead in the second quarter at the fastest pace since the end of 2014.
The report™s inflation figures show prices pressures continue to fall short of the Fed™s goal and, in conjunction with the risks to the economy from stumbling overseas economies and an escalation of the U.S.-China trade war, give policy makers reason to keep reducing interest rates.
The broader personal consumption expenditures price gauge rose 0.2% from the prior month and was up 1.4% from a year earlier, matching the median estimates in a Bloomberg survey. The Fed officially targets 2% inflation.
The core PCE price index, which excludes food and energy, increased 1.6% from July of last year, also matching estimates. Policy makers view the core gauge as a better indicator of underlying price trends and have said they™re also aiming for it to rise 2%.
After adjusting for the increase in inflation, spending rose 0.4%. The July gain was driven by a 0.8% increase in outlays for merchandise, the largest advance in four months, according to the report. Spending on services also picked up.
The Commerce Department™s report showed incomes were restrained in July by a 1.8% decline in personal interest income, although wages and salaries settled back as well. Worker pay increased 0.2% after a 0.5% advance a month earlier.
Source : Bloomberg