WASHINGTON - Consumer spending in the U.S. rose in August for a fourth consecutive month as a pickup in incomes bolstered the biggest part of the economy.
Household purchases, which account for about 70 percent of the economy, climbed 0.3 percent after a revised 0.2 percent advance in July that was more than previously estimated, the Commerce Department reported today in Washington. The advance in August matched the median forecast of economists in a Bloomberg survey. Incomes rose 0.4 percent, the most in six months.
Rising home values, stock market gains, and an improved job market are cushioning the effects of this year’s payroll tax increase and giving households the means to sustain purchases. At the same time, spending growth has shown little momentum since the end of the second quarter.
“We saw decent growth in personal income and stronger wage gains,” said Gus Faucher, senior economist at PNC Financial Services Group Inc. in Pittsburgh, who accurately forecast the gain in income. Still, the figures signal “it’s going to be just, at best, an OK holiday season” for retailers, he said.
Stock-index futures held losses amid concern the budget impasse in Washington will hurt economic growth. The contract on the Standard & Poor’s 500 Index expiring in December fell 0.4 percent to 1,685.5 at 8:56 a.m. in New York.
Projections for spending ranged from increases of 0.1 percent to 0.5 percent after a previously reported July gain of 0.1 percent, according to the Bloomberg survey of 82 economists. The August increase in incomes, which matched the median estimate, followed a revised 0.2 percent rise the prior month.
The figures follow a Commerce Department report yesterday that showed the economy grew at a 2.5 percent annualized rate in the second quarter after expanding 1.1 percent in the first three months of the year. Consumer spending increased at a 1.8 percent pace after 2.3 percent gain in the first quarter.
Adjusting consumer spending for inflation, which generates the figures used to calculate gross domestic product, purchases rose 0.2 percent in August after a 0.1 percent increase the previous month, today’s report showed.