Consumer spending increased steadily in August south of the border, supporting expectations of solid economic growth in the third quarter, while a measure of underlying inflation remained at the Federal Reserve’s 2% target for a fourth straight month.
Figures released Friday by the U.S. Commerce Department revealed that consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.3% last month after an unrevised 0.4% gain in July. Spending last month was driven by outlays on health-care, which offset a drop in motor vehicle purchases.
But economists said Friday’s report should allay fears of the economy overheating and likely keeps the U.S. central bank on a gradual path of interest rate increases. The Fed raised rates on Wednesday for the third time this year and removed the reference to monetary policy remaining "accommodative."
August’s increase in consumer spending was in line with economists’ expectations. When adjusted for inflation, consumer spending rose 0.2% after climbing 0.3% in July.
