Washington, DC, United States (4E) – Spending by American consumers climbed in August for the fourth straight month as rising incomes boosted the biggest component of the country’s economy.
Personal spending, a key gauge of U.S. consumers’ spending on everyday items from automobiles to health care, rose 0.3 percent in August from the previous month, according to a Commerce Department report released Friday. The increase followed July’s revised up figure of 0.2 percent gain.
The projections of the 82 economists surveyed by Bloomberg News ranged from a gain of 0.1 percent to 0.5 percent after an initial estimate of 0.1 percent increase in July.
Incomes rose to a six-month high of 0.4 percent in August. The increase, which is in line with economists’ median estimate, comes after the previous month’s revised 0.2 percent gain.
The report shows that Americans’ salaries and wages benefitted from the small gains in the job market and the broader economy, resulting to higher spending. Household purchases on durable items, such as automobiles and electrical appliances, did not slow down despite rising interest rates since May.
Rising values of homes and stocks as well as an improved job market are offsetting the impact of higher payroll tax, giving households enough money to sustain purchases. Spending growth has also shown some momentum since the end of the second quarter.