The FINANCIAL — U.S. consumers boosted their spending in August, giving the Federal Reserve one more piece of good economic news as it heads into a closely watched meeting this week, according to Nasdaq.
Sales at retail stores and restaurants rose a seasonally adjusted 0.2% from a month earlier, the Commerce Department said on September 15. Revised figures showed sales were up 0.7% in July and were unchanged in June.
Excluding cars, sales rose 0.1% in August.
Retail sales haven’t dropped for six consecutive months, suggesting consumers are benefiting from lower gas prices and shrugging off a slowing global economy.
Retail sales in August were up 2.2% over a year ago.
Excluding gas purchases, August sales were up 0.4%. Over the year, sales excluding gas prices were up 4.4%, a sign that consumers may be spending some of their savings at the pump.
Economists surveyed by The Wall Street Journal had expected sales to rise 0.2% in August from the prior month.
Consumer spending makes up about 70% of economic activity in the U.S. and represents a key measure of the economy’s health. Retail sales represent a big piece of overall consumer spending.
Retail sales figures can be volatile and have wavered from month to month this year. Overall, however, the numbers suggest consumers have been upping their spending in the spring and summer as they begin to feel more confident about their circumstances.
Besides low gas prices, consumers have been buoyed by a strong dollar, which makes imported goods cheaper. The strong labor market has also helped. The unemployment rate fell to 5.1% in August, although wage gains have been muted.
At the same time, however, August brought a jolt of financial instability with both the Chinese stock market and the Dow Jones Industrial Average posting steep and sudden declines.
Sales of cars and car parts rose 0.7%, as did sales at bars and restaurants and food and beverage stores. Sales at health and personal care stores were up 0.8% and up 0.4% at clothing stores.
Gas stations, on the other hand, saw sales tumble 1.8% in August, the sharpest drop since January. Pump prices fell from an average of $2.794 a gallon in July to $2.636 in August.
Strong spending in the spring helped the economy grow at an annual rate of 3.7% in second quarter. A separate report from the Commerce Department found that broad-based consumer spending rose 0.3% in July, roughly the same pace as June.
Fed officials are looking for encouraging signs as they consider raising interest rates this week for the first time in almost a decade. Higher interest rates would signal that the central bank sees the U.S. economy on a solid growth path.
During a Capitol Hill appearance in July, Fed Chairwoman Janet Yellen pointed to strong car sales in May and June as a sign that “many households have both the wherewithal and the confidence to purchase big-ticket items.”
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