Economic Indicators: Gasoline Drives Consumer Spending
The United States Department of Commerce released income and consumer spending numbers on September 28.
Personal income rose 0.1 percent in August, roughly the same as in July. Personal consumption expenditures increased by 0.5 percent in August, compared to 0.4 percent in July, in the biggest jump since February. Disposable personal income dropped 0.3 percent.
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This means that spending increased more than incomes did. Much of the increase can be attributed to a 1.7 increase in purchases for non-durable goods, spearheaded by higher gas prices, which rose about 28.2 cents per gallon in August. This marks about 50 cents gained between July and August, but prices are expected to level out.
Spending on durable goods was up 0.3 percent, partially fueled by Ford (NYSE:F) and General Motors (NYSE:GM) posting record auto sales in August, but total consumer spending is unlikely to improve from the 1.5 percent annual pace for the April-June period. Auto sales are expected to decline in September from last month, but still remain strong.
On September 25, the Conference Board Consumer Confidence Index posted a 9 point increase to 70.3. Consumer confidence and spending are related, and with the Expectations Index surging to 83.7, holiday season spending could tick up this year.
On September 27, the Commerce Department revised the annual growth of real GDP in the second quarter to 1.3 percent, lower than its previous target of 1.7 percent.
Markets are down in morning trading on September 28.