Housing is also recovering. Home prices in 20 U.S. cities climbed 0.5 percent in June from a year earlier, the first increase since a tax credit boosted sales in 2010, according to the S&P/Case-Shiller index released this week. Nationally, property values jumped last quarter by the most in more than six years, the data also showed.
A Commerce Department report yesterday showed Americans stepped up purchases in July for the first time in three months as incomes increased. Faster gains may become harder as fuel costs climb.
Gasoline jumped 50 cents a gallon since July 1 to $3.83 on Aug. 30, according to AAA, the nation’s biggest auto organization. This year’s national average cost for Labor Day, which falls on Sept. 3, may be “the highest ever for the holiday,” according to an e-mail from AAA spokesman Michael Green in Washington.
Retail executives say customers are shopping for bargains. Jos. A. Bank Clothiers Inc., a Hampstead, Maryland-based clothing chain, reported second-quarter profit that topped analysts’ estimates. At the same time, “strong promotional activity is driving the sales increases,” Chief Executive Officer Neal Black said on a conference call this week.
“Customers remain price-sensitive,” he said. “They continue to watch their spending and demand value.”
Consumers in today’s confidence report said they expect an inflation rate of 3.6 percent over the next 12 months, compared with 3 percent in the prior survey.
Over the next five years, the figures tracked by Fed policy makers, Americans expected a 3 percent rate of inflation, up from 2.7 percent in the previous report.