{"id":2019127,"date":"2023-09-01T09:25:02","date_gmt":"2023-09-01T13:25:02","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/us-consumer-spending-accelerates-declining-savings-a-red-flag\/"},"modified":"2023-09-01T09:27:34","modified_gmt":"2023-09-01T13:27:34","slug":"us-consumer-spending-accelerates-declining-savings-a-red-flag","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/us-consumer-spending-accelerates-declining-savings-a-red-flag\/","title":{"rendered":"US consumer spending speeds up, declining savings raise concerns."},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">18<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fus-consumer-spending-accelerates-declining-savings-a-red-flag%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2019127&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div data-post-content=\"true\" class=\"post_content\" id=\"post_content\">\n<h2>US \u200cConsumer\u200b Spending Surges, but Inflation Keeps Interest Rates Steady<\/h2>\n<p>WASHINGTON\u2014In a boost to the US economy, consumer spending saw its largest increase in six months in July. Americans purchased more goods and services, signaling a positive trend.\u200b However, with monthly inflation rates slowing down, it is expected that the Federal Reserve will <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/us-consumer-spending-accelerates-declining-savings-a-red-flag\/\" title=\"US consumer spending speeds up, declining savings raise concerns.\">maintain unchanged interest rates<\/a> next\u2063 month.<\/p>\n<p>The latest report from the Commerce Department, combined with other\u200d data \u2063showing a surprising decline in first-time unemployment benefit applications, has further reduced the risk of a recession\u200b this year.<\/p>\n<p>While the current pace of consumer spending growth is impressive, it\u2063 may not be sustainable. Households are\u2064 depleting their excess savings accumulated during the COVID-19 \u2064pandemic. Additionally, millions of \u2062Americans\u200b will resume student debt repayments in October, and <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/moodys-downgrades-credit-ratings-of-regional-us-banks-may-be-future-cuts-to-others\/\" title=\"Moody's downgrades US regional banks' credit ratings; more cuts expected.\">higher borrowing \u2062costs<\/a> could \u2064make it more challenging for consumers to rely on credit cards for purchases.<\/p>\n<blockquote>\n<h3>Related Stories<\/h3>\n<ul>\n<li>\n        <a href=\"http:\/\/www.theepochtimes.com\/article\/federal-reserves-key-inflation-measure-jumps-incomes-slow-5484220\">Federal Reserve&#8217;s Key Inflation \u200cMeasure \u2062Jumps; Incomes Slow<\/a><br \/>\n        <span class=\"text-comp-caption\">8\/31\/2023<\/span>\n      <\/li>\n<li>\n        <a href=\"http:\/\/www.theepochtimes.com\/article\/wall-street-opens-higher-as-inflation-data-boosts-rate-pause-hopes-5484134\">Wall Street \u200bOpens Higher as Inflation Data\u2064 Boosts Rate-Pause Hopes<\/a><br \/>\n        <span class=\"text-comp-caption\">8\/31\/2023<\/span>\n      <\/li>\n<\/ul>\n<\/blockquote>\n<p>&#8220;Americans keep spending,&#8221; said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto. &#8220;The &#8216;soft landing&#8217; \u2064view still\u2062 holds, but there\u2063 are some warning signs coming from the consumer as the savings\u200c rate continues to tick down.&#8221;<\/p>\n<p>Consumer spending, which accounts for \u2064more than two-thirds of US economic\u200b activity, \u200drose by 0.8 percent\u2064 last month. June&#8217;s data\u2063 was \u200calso <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/us-economic-growth-revised-up-to-7-for-end-of-2021-before-impact-of-omicron\/\" title=\"US Economic Growth Revised up to 7% for End of 2021 Before Impact of Omicron\">revised slightly higher<\/a>, showing a\u200d 0.6 percent increase\u2063 instead of the \u2064previously reported 0.5\u200d percent. Economists had predicted a \u200d0.7 percent \u200drise.<\/p>\n<p>Spending \u2062on goods increased by 0.7 percent, primarily driven by purchases of products with a short lifespan such as pharmaceuticals, recreational items, groceries,\u2063 and clothing. There \u200cwere also\u2062 notable increases in spending\u2062 on recreational goods, vehicles, household furnishings and equipment, and \u200cother durable goods.<\/p>\n<p>Services spending rose by 0.8 percent, fueled by portfolio management and investment advice services, housing and utilities, restaurants,\u2064 and healthcare. Despite the anticipation surrounding movie releases and concerts, spending on recreation services only saw\u2062 a marginal increase.<\/p>\n<p>&#8220;This could suggest upside \u200drisks for services consumption in August,&#8221; said Veronica Clark,\u2064 an economist \u200bat Citigroup in New York.<\/p>\n<p>When adjusted for inflation, consumer spending saw a 0.6 percent increase, the largest gain since January. Real consumer spending, which\u200c accounts for inflation,\u200c also rose by \u20630.4 percent\u2062 in June. This \u2064solid growth in\u200c July sets a positive trajectory for real consumer spending at the beginning of the third quarter, leading \u200beconomists to \u200braise their gross domestic product (GDP) estimates.<\/p>\n<p>JPMorgan has increased its GDP estimate for the July\u2013September quarter to a\u200b 3.5 percent annualized rate, up from the previous 2.5 percent pace. In \u2064the second quarter, the economy grew at a rate of 2.1 percent.<\/p>\n<p>However, with the savings rate dropping to 3.5 percent in\u2062 July, the lowest since November 2022, the outlook for consumer spending is less robust. In June, the savings rate stood at 4.3 percent.\u2062 Some\u200c of\u200d the decline in July can be attributed\u200b to higher taxes, which resulted in a 0.2 percent decrease in disposable income after accounting for inflation.<\/p>\n<p>Stocks on Wall Street\u200d are trading higher, and the dollar \u200bhas strengthened against \u200cother currencies.\u2064 US Treasury yields have fallen.<\/p>\n<div>\n<figure style=\"width:600px\" class=\"alignnone\"><figcaption>People walk through a market \u2064in Manhattan in New York City on \u2063April 12, 2023. (Spencer Platt\/Getty Images)<\/figcaption><\/figure>\n<\/p><\/div>\n<h2>Tight Labor Market<\/h2>\n<p>Inflation, as measured by the personal consumption expenditures (PCE) price index, rose by 0.2 percent last month, matching June&#8217;s increase. Food prices increased by 0.2 percent, while energy prices edged up by 0.1 percent. Over the past 12 months, the PCE price index has \u200brisen by 3.3 percent, compared\u200b to a 3.0 percent increase in June.<\/p>\n<p>Excluding the volatile\u200b food and energy\u200b components, the PCE price index saw a \u20630.2 percent gain, similar to the previous month. The core PCE \u2062price index, which excludes \u2064food and energy, \u2062increased by 4.2 percent year-on-year \u200cin\u2064 July, up \u2062from a 4.1 percent rise in June.<\/p>\n<p>The annual PCE inflation rates were influenced by a lower base of comparison\u2063 from the \u2064previous year. The Federal Reserve tracks the PCE price indexes to monitor its 2 percent inflation target.<\/p>\n<p>&#8220;But make no mistake, the\u200c monthly sequential momentum around 0.2\u2062 percent is \u2064exactly what Fed \u2064policymakers \u200dare looking for to get inflation back toward the 2 percent \u2062target,&#8221;\u2063 said Gregory Daco, chief \u2064economist at EY-Parthenon\u2063 in New York.<\/p>\n<p>Since March 2022, the Fed has raised its policy rate by 525 basis points to the current range of\u200d 5.25 percent\u20135.50 percent. Financial markets anticipate that the\u200b <\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>U.S. consumer spending surged in July, marking the largest increase in six months. However, with inflation rates slowing down, it is anticipated that the Federal Reserve will maintain current interest rates in the upcoming month. Additional data also revealed an unforeseen drop in initial jobless claims.<\/p>\n","protected":false},"author":66,"featured_media":2019128,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[543],"tags":[],"class_list":["post-2019127","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-epoch-times"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2019127","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2019127"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2019127\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2019128"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2019127"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2019127"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2019127"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}