Consumer spending in U.S. climbs 0.3% as incomes pick up

Disposable Income

Disposable income, the money left over after taxes, rose 0.3% after adjusting for inflation, the most in five months. It increased 0.2% in July.

Spending on durable goods including automobiles increased 0.8% after a 0.4% gain the prior month. Purchases of non-durable goods including gasoline fell 0.2% after a 0.6% advance.

The core price measure, which excludes food and fuel, rose 0.2% from July.

Faster job gains would help drive the wage increases needed to boost household purchases. Employers added 169,000 jobs in August, compared with an average 195,000 a month in the first half of the year.

Federal Reserve policy makers said at the conclusion of their Sept. 17-18 meeting that they want to see more evidence of an improvement in employment and the economy as they unexpectedly decided to continue their record monthly stimulus.

Fed’s Bernanke

“Conditions in the job market today are still far from what all of us would like to see,” Chairman Ben S. Bernanke said after a two-day meeting of the Federal Open Market Committee. “The committee has concern that rapid tightening of financial conditions in recent months would have the effect of slowing growth.”

Cheaper borrowing costs have helped keep the auto industry at the forefront of the rebound. Ford, General Motors Co. and Toyota Motor Corp. reported U.S. sales gains in August that exceeded analysts’ estimates. Sales of cars and light trucks rose at a 16 million annualized pace during the month, the strongest since November 2007, according to data from Ward’s Automotive Group.

At the same time, retailers aren’t faring as well. Wal-Mart Stores Inc. is cutting orders to suppliers this quarter and next to tame rising inventory. Merchandise has been piling up because consumers have been spending less freely than Wal-Mart projected and the company has forfeited sales because it doesn’t have enough workers in stores to keep shelves adequately stocked.

Wal-Mart

“We feel good about our inventory position,” Wal-Mart spokesman David Tovar said in a telephone interview. The order pullback is happening “category by category,” Tovar said. “In some cases, we’re going to be taking less, in some we’re going to be taking more.”

U.S. chains are bracing for a tough holiday season, with sales are projected to rise 2.4%, the smallest gain since 2009, according to ShopperTrak, a Chicago-based firm.

Wal-Mart cut its annual profit forecast after same-store sales fell 0.3% in the second quarter.

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