Consumer spending in the United States got off to a fairly firm start in the third quarter, rising by the most in five months and offering hope that economic growth could pick up this quarter. þþThe Commerce Department said Thursday that consumer spending increased 0.4 percent in July after a flat reading in June. The rise in consumer spending, which accounts for 70 percent of the nation’s economic activity, was in line with economists’ expectations. þþWhen adjusted for inflation, consumer spending increased 0.4 percent, also the largest increase since February. þþReal consumer spending dipped 0.1 percent in June, so last month’s increase was an encouraging sign after consumption growth slowed by the most in a year in the second quarter. þþSluggish consumer spending held back economic growth to a 1.7 percent annual pace in the April-June period.þþ The increase in spending came as income increased 0.3 percent after rising by the same margin in June. Income available to households after stripping out inflation and taxes increased 0.3 percent after gaining 0.2 percent in June. þþWith spending a touch above income growth, the saving rate slipped to 4.2 percent in July from 4.3 percent the prior month. þþData on housing, job growth and retail sales suggest the economy fared better early in the third quarter, but was not strong enough to take additional monetary easing by the Federal Reserve off the table. þþPolicy makers from the central bank meet Sept. 12-13. Economists are divided on whether the Fed will announce a third round of bond purchases to stimulate faster economic growth. þþThe news on increased consumer spending came as the Labor Department reported that the number of Americans filing new claims for jobless benefits was unchanged last week, pointing to a labor market that was treading water. þþInitial claims for state unemployment benefits were 374,000, seasonally adjusted. The four-week moving average for new claims, a better measure of labor market trends, rose 1,500 to 370,250. þþThe prior week’s figure was revised up to show 2,000 more applications than previously reported. þþInitial jobless claims have risen by 10,000 in August, suggesting some moderation in the pace of job growth this month after payrolls increased 163,000 in July from 64,000 in June. þþThe unemployment rate, which ticked up to 8.3 percent in July, has been stuck above 8 percent for more than three years, the first time this has happened since the Great Depression. þþThe number of people still receiving benefits under regular state programs after an initial week of aid fell 5,000 to 3.32 million in the week ended Aug. 18. þ
Source: NY Times
