Consumer spending in the U.S. barely rose in August after adjusting for inflation, showing the economic expansion is struggling to gain momentum.
Household purchases rose 0.5 percent, matching the median estimate of economists surveyed by Bloomberg and the biggest gain since February, according to data from the Commerce Department issued in Washington today. The gain mainly reflected a 0.4 percent jump in prices, the biggest since March 2011, leaving so-called real spending up 0.1 percent.
A slack job market and rising food and gasoline prices are squeezing households just as concern mounts that lawmakers might not be able to avoid the fiscal cliff of tax increases and government spending cuts slated to take effect next year. At the same time, rising stock prices and an improving housing market are lifting consumer confidence, which may help underpin demand.
“The consumer is not going to be able to lead the recovery,” said Ryan Sweet, a senior economist for Moody’s Analytics Inc. in West Chester, Pennsylvania, who correctly forecast the gain in spending. “We’re headed into a few months of soft consumer spending. Even though gas prices look like they may be peaking for the year, that’s going to weigh on spending for the next month or so.”
Projections for spending in the Bloomberg survey of 77 economists ranged from gains of 0.1 percent to 0.8 percent.
Stock-index futures held earlier losses after the report. The contract on the Standard & Poor’s 500 Index maturing in December fell 0.6 percent to 1,432.9 at 8:35 a.m. in New York.
Incomes rose 0.1 percent in August, matching the previous month’s gain after the Commerce Department revised down those figures. Wages and salaries also increased 0.1 percent, the report showed.
Because incomes grew less than spending, the saving rate dropped to 3.7 percent, the lowest since April, from 4.1 percent.
Disposable income, or the money left over after taxes, dropped 0.3 percent after adjusting for inflation, the weakest reading since November. It rose 0.1 percent in the prior month.
The cost of fuel continues to be a drag on buying power. The pump price for a gallon of regular unleaded gasoline averaged $3.80 through Sept. 26 compared with $3.70 in August and $3.42 the prior month, according to data from AAA, the largest U.S. auto group.