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The
Commerce Department said on Friday that consumer spending, which
accounts for more than two-thirds of U.S. economic activity,
fell 0.1 percent last month after accounting for inflation.
Analysts polled by Reuters had expected a 0.1 percent gain.
Robust consumer spending partially offset weak business
investment and falling business inventories in the second
quarter when the economy expanded at a lackluster 1.4 percent
annual rate.
Overall economic growth could still accelerate in the current
quarter even with August's slight decline in consumer spending,
although households appear to spending with less gusto than in
prior months.
Consumer spending has been driven by a tightening labor market,
which Fed Chair Janet Yellen said this week might be lifting
incomes. Personal income rose 0.2 percent in August, in line
with expectations.
Consumer prices also rose about as much expected, with the price
index outside food and energy increasing 0.2 percent from the
prior month. That left inflation outside food and energy at 1.7
percent in the 12 months through August, up a tenth of a
percentage point from the prior month and closer to the Fed's 2
percent inflation target.
Yellen said last week she expected the U.S. central bank would
raise interest rates once this year to keep the economy from
eventually overheating.
(Reporting by Jason Lange; Editing by Paul Simao)
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