U.S. consumer spending increased solidly in July, as households bought a range of goods and services, which could cool financial market fears of a recession. However, experts say, the pace of growth in consumption is unlikely to be sustained amid tepid income gains.
Figures released Friday by the Commerce Department revealed consumer spending, which accounts for more than two-thirds of U.S. economic activity, improved 0.6% last month after an unrevised 0.3% gain in June. Economists had forecast consumer spending advancing 0.5% last month
The report added to trade and inventory data in suggesting that while the economy was slowing, it was not losing momentum all that rapidly. A year-long trade war between Washington and China has spooked financial markets. The U.S. yield curve has inverted, stoking fears that the longest economic expansion in history was in danger of being interrupted by a recession.
Consumer prices as measured by the personal consumption expenditures (PCE) price index rose 0.2% in July as a drop in the cost of food was offset by a surge in energy goods and services. The PCE price index edged up 0.1% in June.
In the 12 months through July, the PCE price index increased 1.4% after gaining 1.3% in June.
Excluding the volatile food and energy components, the PCE price index rose 0.2% last month, matching June’s increase. That kept the annual increase in the so-called core PCE price index at 1.6% in July.
