Post by mhbruin on Aug 26, 2022 10:10:21 GMT -8
In Case the Democrats Needed More Good News
U.S. consumer spending barely rose in July as a drop in gasoline prices weighed on receipts at service stations, but monthly inflation slowed down considerably, which could give the Federal Reserve room to scale back its aggressive interest rate hikes.
Though the report from the Commerce Department on Friday showed a modest gain in personal income last month, wages increased strongly, which could help to underpin consumer spending and keep the economy growing, though moderately.
The slowdown in inflation is likely to be welcomed by Fed officials. Fed Chair Jerome Powell is due on Friday to address the annual Jackson Hole global central banking conference in Wyoming and could shed more light on how much further U.S. borrowing costs need to rise. The Fed has hiked its policy rate by 225 basis points since March.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, edged up 0.1% last month. Data for June was revised slightly down to show outlays advancing 1.0% instead of 1.1% as previously reported. Economists polled by Reuters had forecast consumer spending would gain 0.4%.
The national average gasoline price dropped to about $4.27 per gallon in the last week of July after hitting an all-time high just above $5 in mid-June, according to data from motorist advocacy group AAA. While that freed money for spending elsewhere, it hurt sales at service stations.
As a result, spending on goods fell 0.2% after surging 1.5%. That partially offset a 0.3% rise in spending on services.
A moderate pace of consumer spending in the second quarter helped to blunt the drag on the economy from a sharp slowdown in inventory accumulation caused by supply chain bottlenecks. Gross domestic product contracted at a 0.6% annualized rate last quarter after shrinking at a 1.6% pace in the first quarter.
The economy is, however, not in a recession. When measured from the income side, the economy grew at a 1.4% pace, slowing from the January-March quarter's 1.8% rate, the government reported on Thursday.
U.S. consumer spending barely rose in July as a drop in gasoline prices weighed on receipts at service stations, but monthly inflation slowed down considerably, which could give the Federal Reserve room to scale back its aggressive interest rate hikes.
Though the report from the Commerce Department on Friday showed a modest gain in personal income last month, wages increased strongly, which could help to underpin consumer spending and keep the economy growing, though moderately.
The slowdown in inflation is likely to be welcomed by Fed officials. Fed Chair Jerome Powell is due on Friday to address the annual Jackson Hole global central banking conference in Wyoming and could shed more light on how much further U.S. borrowing costs need to rise. The Fed has hiked its policy rate by 225 basis points since March.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, edged up 0.1% last month. Data for June was revised slightly down to show outlays advancing 1.0% instead of 1.1% as previously reported. Economists polled by Reuters had forecast consumer spending would gain 0.4%.
The national average gasoline price dropped to about $4.27 per gallon in the last week of July after hitting an all-time high just above $5 in mid-June, according to data from motorist advocacy group AAA. While that freed money for spending elsewhere, it hurt sales at service stations.
As a result, spending on goods fell 0.2% after surging 1.5%. That partially offset a 0.3% rise in spending on services.
A moderate pace of consumer spending in the second quarter helped to blunt the drag on the economy from a sharp slowdown in inventory accumulation caused by supply chain bottlenecks. Gross domestic product contracted at a 0.6% annualized rate last quarter after shrinking at a 1.6% pace in the first quarter.
The economy is, however, not in a recession. When measured from the income side, the economy grew at a 1.4% pace, slowing from the January-March quarter's 1.8% rate, the government reported on Thursday.