US consumer spending posts slower growth in July
WASHINGTON (AP) — American consumers boosted spending at a slower pace in July, while their incomes accelerated slightly.
Spending grew 0.3 percent in July following a 0.5 percent increase in June, the Commerce Department reported Monday. The slowdown had been expected given an earlier report that retail sales were flat in July. Incomes grew 0.4 percent in July, up from a 0.3 percent increase in June.
Economists are counting on solid gains in consumer spending, which accounts for 70 percent of economic activity, to power overall growth in the second half of the year.
The deceleration in July is likely to be followed by stronger spending increases in coming months. For July, spending on durable goods such as autos rose by a solid 1.6 percent, but spending for nondurable goods fell.
Laura Rosner, an economist at BNP Paribas, described both the income and spending numbers for July as “solid.” They will likely be read by Fed officials as confirmation of their economic outlook, which would help bolster the case for a September rate hike, she said.
The overall economy, as measured by the gross domestic product, grew at an anemic annual rate of 1.1 percent in the April-June quarter, marking a full year in which growth has limped along at an annual rate of 1.2 percent. But economists believe many of the headwinds that have been holding back growth are starting to diminish. They expect growth in the current quarter to rebound to above 3 percent, powered by strong consumer spending and solid employment gains.