US consumers are spending more in Automobiles
US consumers are spending more in Automobiles :- In the month of July U.S consumers’ spending increased for a fourth straight amid the strong demands for automobiles, pointing to a pickup in the economic growth that could cover its way for the Federal Reserve to raise its interest rates in the year.
According to the Commerce Department
The Commerce Department said that the consumer spending, which accounts for around more than two-thirds of the U.S. economic activity, which rose to 0.3 percent in July after a 0.5 percent gain in the month of June.
July’s increase was exactly how the economists’ expected. When adjusted for the inflation, consumer’s spending also increased to 0.3 percent in July after advancing to 0.4 percent in the month of June.
All consumer expenditure seems to have retained some of its momentum from the second innings, when it mitigates some of the impact of the sharp inventory drop and the prolonged business investment decreases.
The economy grew at an unimaginative rate of 1.1 percent per annual rate in the second quarter.
The U.S. stock’s future rose after the data recorders were released, while prices for the U.S. Treasuries gained earlier. The US dollar was trading high amongst the basket of currencies.
The July’s consumer spending data was added to the reports on goods trade deficit, industrial production, durable goods orders and residential construction that have pointed to acceleration in the economic growth early in the third quarter.
The Atlanta Fed has estimated a third-quarter GDP growth rise of a 3.4 percent annual pace.
Consumer spending is currently being driven by the tightening labor market, which is steadily lifting its wages. The rising home values and the stock market prices, which are boosting the household wealth, are also supporting the consumption.
Fed Chair Janet Yellen told a gathering of the global central bankers that she believed that the case for raising the interest rates have been strengthened in the recent months by the “great performance of the labor market and our outlook at the economic activity and inflation.”
In the month of July, there were signs of inflation pressures even as the consumer spending firmed.
The price index of personal consumption expenditures (PCE) exclusive of the volatile food and energy components made up 0.1 percent after a gain in June.
In 12 months the core PCE increased to about 1.6 percent. It has been rising at the same margin every month since March. The core PCE is the Fed’s preferred inflation measure and is currently running below its 2 percent target.
Consumer spending in July was lifted by 1.6 percent surge in the purchases of long-lasting manufactured goods such as the automobiles. Spending on the services rose about 0.4 percent, but outlays on non-durable goods slipped by 0.5 percent.
Personal income’s also increased by 0.4 percent in July after rising by 0.3 percent in June.