At the same time, job and income growth is helping drive consumer spending, which accounts for about 70% of the economy. Labor Department data last week showed employers added 195,000 workers for a second month in June. The figures also showed hourly earnings in the 12 months to June rose by the most since July 2011.
Retail sales rose 0.6% in May, the biggest increase in three months and propelled by a jump in motor vehicle purchases, Commerce Department figures showed last month.
Cars and light trucks sold at a 15.89 annualized rate in June, the strongest since November 2007, according to data from Ward’s Automotive Group.
General Motors Co. said June sales were up 6.5% from the same month last year, marking the Detroit-based company’s best sales month since September 2008.
“We’re in an economy that gets a little bit stronger each and every month,” said Kurt McNeil, vice president of U.S. sales and service, speaking during a July 2 earnings call. “The fact that the jobs data is finally trending positive, the stable fuel prices, consumer sentiment and confidence showing positive signs, we think that’s finally unlocking the American families coming in to our showrooms.”
Consumers surveyed for today’s confidence report expect an inflation rate of 3.3% over the next 12 months, up from the June forecast of 3%, today’s report showed. Over the next five years, Americans expect a 2.9% rate of inflation, matching the previous three months.