U.S. consumer spending rose more than expected in August, driven by vacations, dining out, and higher demand for services, keeping the economy on solid ground even as inflation picked up. The Commerce Department reported Friday that household consumption, which makes up over two-thirds of economic activity, climbed by 0.6% after a 0.5% gain in July. …
U.S. Consumer Spending Surges in August, Inflation Edges Higher
U.S. consumer spending rose more than expected in August, driven by vacations, dining out, and higher demand for services, keeping the economy on solid ground even as inflation picked up.
The Commerce Department reported Friday that household consumption, which makes up over two-thirds of economic activity, climbed by 0.6% after a 0.5% gain in July.
Spending was boosted by travel, recreation, restaurants, housing, and healthcare, alongside higher outlays on gasoline, food, and clothing.
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The resilience comes despite a slowing labour market, with job growth nearly stalling in recent months. Economists say consumption is being powered by high-income households benefiting from strong stock markets and property values, while lower-income families continue to struggle under rising prices and looming cuts to food stamp benefits.
Personal income increased 0.4% in August, aided by government transfers, though wages rose only 0.3%. Strong consumer activity supported GDP growth at 3.8% in the second quarter the fastest pace in nearly two years with the Atlanta Fed projecting 3.3% growth in Q3.
Inflation also firmed, with the Personal Consumption Expenditures (PCE) Price Index up 0.3% in August and 2.7% year-on-year, the sharpest rise since February. Core inflation held steady at 2.9%.
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The Federal Reserve, which cut rates last week to 4.00–4.25%, faces pressure as inflation risks tilt upward while job growth remains weak.
Esther Ososanya is an investigative journalist with Pinnacle Daily, reporting across health, business, environment, metro, Fct and crime. Known for her bold, empathetic storytelling, she uncovers hidden truths, challenges broken systems, and gives voice to overlooked Nigerians. Her work drives national conversations and demands accountability one powerful story at a time.
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