At the same time, residential construction increased at a 14.2% annualized rate, faster than the 12.9% pace previously reported.
Rising real-estate values and stock-market gains are boosting Americans’ wealth, which will help sustain consumption. Net worth for households and non-profit groups climbed by $1.34 trillion in the second quarter, or 1.8% from the previous three months, to $74.8 trillion, Fed data showed yesterday.
Automobiles remain a bright spot. Cars and light trucks sold at a 16 million annualized rate in August, the fastest since November 2007, figures from Ward’s Automotive Group showed. Sales at General Motors Co., Ford Motor Co., Toyota Motor Corp. and Honda Motor Co. exceeded analysts’ estimates.
Domestic final sales -- which strip out inventories, exports and imports -- increased 2.1% compared with a previously estimated gain of 1.9%.
Recent housing data highlight the risk that the rise in mortgage borrowing costs to a two-year high poses for the industry’s rebound, which has boosted growth the past two years. New-home sales for August and July were the weakest back-to-back readings of the year, a report showed yesterday.
“The tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement,” the Fed said in a statement last week. Policy makers “decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.”
Fed officials on Sept. 18 reduced their forecasts for economic growth this year and next. They forecast GDP will expand 2% to 2.3% in 2013, down from a June projection of 2.3% to 2.6% growth.
Business spending also may take time to pick up as fiscal uncertainty weighs on demand. Orders for goods such as computers and machinery rose less than forecast in August.
Congress hasn’t passed a budget for the 2014 fiscal year, which starts Oct. 1. The House and Senate are at odds over using the measure to stop funding the health law, and the lack of an agreement could lead to a government shutdown on Oct. 1.
Executives at Cintas Corp., a Cincinnati-based provider of uniforms, supplies and safety products to businesses, are among those concerned about the outlook.
“Much uncertainty remains in the U.S. economy,” William Gale, chief financial officer of said on a Sept. 19 earnings call. “The employment picture from month to month remains uneven and inconsistent, a reflection of business’ uncertainty about future investment plans.”
Today’s report also showed price pressures remained contained. A measure of inflation, which is tied to consumer spending and strips out food and energy costs, rose at a 0.6% annualized pace, the weakest performance since the first quarter of 2009 and compared with a previous estimate of 0.8%.