Rising incomes, low inflation boost US consumer spending
Indicators point to continued gains in consumption for the year, tough questions for Fed
Robust hiring, a second-straight month of wage increases and low inflation will likely keep the US economy on steady footing for the second half of the year.
Data from the Commerce department released Thursday showed that purchases rose 0.3% in July over the previous month, vs estimates of a 0.4% rise. Incomes rose 0.4%, also beating expectations, the biggest rise since February.
Low inflation conintues to be a big question mark for the Federal Reserve and will test their resolve to raise interest rates again this year.
The National Association of Realtors’ Pending Home Sales Index decreased 0.8%, versus an expected 0.3% gain. The index is now 1.3 percent below a year ago, falling on an annual basis for the past three months.
NAR reduced its projection for full-year sales to an increase of 0.7%, from 2.6 percent. “The pace of new listings is not catching up with what’s being sold at an astonishingly fast pace,” Lawrence Yun, NAR’s chief economist, said in a statement.
More US consumer data today from Bloomberg:
BLOOMBERG CONSUMER COMFORT (WEEK ENDED AUG. 27):
- * Consumer comfort measure climbed to 53.3, highest since March 2001, from 52.8
- * Gauge of views on the economy rose to 16-year high of 54.4 from 53.2
- * Index of personal finances improved to 59.3 from 59
- * Index of buying climate at three-month high of 46.1 after 46
- The Takeaway: Confidence climbed for the seventh straight week as a robust labor market made Americans feel better about the economy. The comfort index’s 6.3-point gain over the last seven weeks is the best streak in almost 11 years. Progress on employment is one big reason for Americans’ positive moods, along with stock-market gains and home-price appreciation.
- Sentiment among unemployed Americans rose to the highest level since July 2007, and spirits brightened for workers near the top and bottom of the income ladder. A separate report from the Labor Department showed initial claims for unemployment benefits hovered last week near a four-decade low.