Consumer Spending Edged Up 0.3 Percent in August

In this Aug. 28, 2018, file photo cashier Liz Moore, right, checks out customers Christie Meeks, center, and Lisa Starnes, left, at a Kohl’s store in Concord, N.C. (AP Photo/Chuck Burton, File)

(CN) — Consumer spending rose a modest 0.3 percent in August with sales of cars and other durable goods declining, the Commerce Department said Friday.

The rise in spending was a decline of 0.1 percent from the 0.4 percent gains registered in both June and July. It was also the smallest month-over-month change in spending since February.

Economists said that they expected low unemployment to keep consumer spending growing at a solid pace for the rest of this year and into next year.

The spending report showed that purchases of durable goods, a category that includes autos, fell by 0.1 percent in August.

Purchases of nondurable goods, meanwhile, jumped 0.5 percent, an increase that reflected in part rising gas prices, while purchases of services rose 0.4 percent.

Incomes, which provide the fuel for future spending, were up a modest 0.3 percent for a second straight month although wages and salaries, the key component of incomes, rose a strong 0.5 percent, the best showing since January.

The report came a day after a government report showing the economy grew at a 4.2 percent pace in the second quarter, fueled  by strong consumer spending and farmers pushing forward soybean exports to China before Beijing’s retaliatory tariffs came into effect in early July.

But the same report noted a decline in orders for key capital goods in August and a further widening of the goods trade deficit.

As a result, the nation’s gross domestic product is widely expected to slow in the second half of this year to around 3 percent. That pace would still be solid enough to boost growth for the full year to 3 percent, the best annual performance in 13 years.

The Associated Press contributed to this report.

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