US consumer spending increased 0.6% in August, above expectations, as households took vacations and dined out, the Commerce Department reported. The data reinforced the economy’s solid footing in the third quarter, while inflation continued to edge higher.
The report indicated that the economy has retained much of its momentum from the second quarter, supported by low layoffs and strong business demand for equipment. This suggests the Federal Reserve may have little reason to cut rates further after easing policy last week.
Still, the labor market shows signs of strain, with job growth nearly stalling in the past three months, weighed down by trade policy uncertainty and an immigration crackdown that reduced the supply of workers.
“This report offers no support for immediate and aggressive rate cuts,” said Carl Weinberg, chief economist at High Frequency Economics.
Source: Reuters
