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US consumer spending ticks higher in August
US consumers spent slightly more than expected in August as households saw a surge in cash at their disposal, government data showed Friday.
Consumer spending, considered a key indicator of US economic growth, rose 0.4 percent from July, the second straight month of increases after stagnating in June, according to seasonally adjusted data from the Commerce Department.
The increase was better than the 0.3 percent rise forecast by analysts.
Consumer spending appeared bolstered by a strong rise in personal disposable income, the income left after personal taxes.
Both personal income and disposable income increased 0.5 percent in August. Personal income in July had risen 0.2 percent, while disposable income had been flat for the two preceding months.
Economists closely watch the monthly reading on consumer spending, which accounts for roughly 70 percent of the nation's output.
The August numbers suggested that the world's largest economy is continuing to recover from the worst recession in decades, analysts said.
The income and spending data "support the idea that a double-dip recession remains a low probability," said Patrick O'Hare at Briefing.com.
Both figures are calculated in current dollars. In inflation-adjusted data, both "real" spending and income rose 0.2 percent.
Inflation remained muted amid weak demand from consumers facing significant uncertainties about recovery prospects when unemployment hovers near 10 percent and the housing market remains devastated more than three years after its collapse.
The Commerce Department's price index on personal consumption expenditures (PCE) rose 1.5 percent in August from a year ago, maintaining the pace of the previous month.
The so-called core price index, excluding food and energy, also held steady at a 1.4 percent increase.
The core reading remained below the comfort zone of the Federal Reserve. The central bank unofficially prefers inflation of between 1.7 percent and 2.0 percent for the health of the economy.
