U.S. consumer spending recorded a more -than -expected increase in August and there was a decline in July after a revision. This carries an indication that the economy grew slowly in the third quarter due to an increase in Covid-19 infections that curbed demand for the service.
The Commerce Department said on Friday that consumer spending, which accounts for more than two -thirds of U.S. economic activity, jumped 0.8% in August, erasing part of the decline in motor vehicle sales.
Data for July was revised to show spending decreased 0.1% instead of gaining 0.3% as previously reported. The August reading was also higher than the forecasts of economists who were targeting a 0.6% increase in August.
The increase in spending was driven by back -to -school spending and the payment of child tax credits from the government. On the other hand, pandemic contagion infections are declining which is leading to increased demand for travel and other things.
According to the head of global strategy at JPMorgan Funds in New York, ‘consumer momentum is expected to increase in the coming months and this will push the economy to continue to recover and inflation tends to be high.
Inflation maintained an upward trend in August. The personal consumption expenditure (PCE) price index, excluding volatile food and energy components, rose 0.3% after rising by the same margin in July.
U.S. central bank says it will likely start reducing its monthly bond purchases in November and raise interest rates faster than expected.
