Consumer spending in the U.S. rose in August for a fourth consecutive month as a pickup in incomes bolstered the biggest part of the economy.
Household purchases, which account for about 70% of the economy, climbed 0.3% after a revised 0.2% advance in July that was more than previously estimated, the Commerce Department reported today in Washington. The advance in August matched the median forecast of economists in a Bloomberg survey. Incomes rose 0.4%, the most in six months.
Rising home values, stock market gains, and an improved job market are cushioning the effects of this year’s payroll tax increase and giving households the means to spend. Carmakers such as Ford Motor Co. are reaping the benefits of pent-up demand for vehicles and easier access to credit, which are helping fuel the economic expansion.
“Consumers are feeling better about their balance sheets,” Brett Ryan, an economist at Deutsche Bank Securities Inc. LLC in New York, said before the report. “Consumers aren’t necessarily accelerating purchases but they’re feeling more confident. We’re seeing purchases of big-ticket items like cars and houses pick up.”
Stock-index futures held losses amid concern the budget impasse in Washington will hurt economic growth. The contract on the Standard & Poor’s 500 Index expiring in December fell 0.4% to 1,685.7 at 8:37 a.m. in New York.
Projections for spending ranged from increases of 0.1% to 0.5% after a previously reported July gain of 0.1%, according to the Bloomberg survey of 82 economists. The August increase in incomes, which matched the median estimate, followed a revised 0.2% rise the prior month.
The figures follow a Commerce Department report yesterday that showed the economy grew at a 2.5% annualized rate in the second quarter after expanding 1.1% in the first three months of the year. Consumer spending increased at a 1.8% pace after 2.3% gain in the first quarter.
Adjusting consumer spending for inflation, which generates the figures used to calculate gross domestic product, purchases rose 0.2% in August after a 0.1% increase the previous month, today’s report showed.
The saving rate climbed to 4.6% from 4.5%, while wages and salaries increased 0.4% after falling 0.3%.