US consumer spending rises 0.2% in August; headline PCE index slows
2024.09.27 09:58
Investing.com — US consumer spending grew at a slower than anticipated rate in August, while inflation pressures continued to ease.
, which accounts for more than two-thirds of economic activity, grew by 0.2% in August, slowing from an unrevised 0.5% gain in the prior month, according to data from the Commerce Department’s Bureau of Economic Analysis on Friday. Economists had anticipated an uptick of 0.3%. It was the slowest increase in seven months.
Household income growth also unexpectedly slowed to 0.2% from 0.3% in July. The figure was tipped to edge up by 0.4%.
In a post on social media platform X, Kathy Jones, chief fixed income strategist at Charles Schwab (NYSE:), said both numbers are “slowing but not falling off a cliff.” Wage gains have recently supported consumer spending activity despite some weakening in the US labor market.
Meanwhile, the (PCE) price index, which is used by Federal Reserve officials as a tracker of inflation, rose by 0.1% on a monthly basis, below estimates that it would match July’s pace of 0.2%. Year-on-year, the cooled to 2.2%, slower than projections of 2.3% and 2.5% in July.
When stripping out volatile items like food and fuel, the also decelerated to 0.1% month-on-month and sped up slightly as anticipated to 2.7% from 2.6% on an .
The data comes after the Fed slashed borrowing costs by an outsized 50 basis points last week and signaled that it would roll out more drawdowns later this year. Fed Chair Jerome Powell argued that part of the rationale for a jumbo cut — instead of a more traditional quarter-point reduction — was to provide more support to labor demand, in a sign that the central bank’s major focus may be pivoting away from fighting inflation.
