Consumer spending in the U.S. increased during August. The increase was the highest in six months, as people paid more due to higher fuel prices. A Friday report released by the government pointed to lackluster growth in the economy during the third quarter.
The Department of Commerce said that spending by consumers jumped 0.5% after an increase of 0.4% during July. Economists expected the increase in August.
Spending by consumers accounts for nearly 70% of the economic activity in the U.S. and the increase for the second consecutive month mostly was a reflection of higher prices of gasoline, which increased by an average of 28 cents a gallon in August. Purchases in new automobiles also helped to increase consumer spending last month.
In August, nondurable goods’ spending was up 1.7% after a 0.8% increase in July. When the spending is adjusted to take inflation into account, spending by consumers was up just 0.1%.
The latest figures suggest that growth in spending by consumers will not likely improve significantly for the quarter from the 1.5% annual pace that was recorded for the second quarter between April and June.
Consumer spending at a slower pace and a decline in farm inventories because of the severe summer drought kept the gross national product growth at a pace of 1.3% during the second quarter, which was a decline from the first quarter of 2%.
With the prices of gasoline increasing, pressures from inflation increased in August. However, the preferred measure for inflation for the Federal Reserve increased just 0.1% in August.
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