US consumer spending edges up in June

The increase comes after the Commerce Department reported last week that inflation-adjusted consumer consumption rose at an annualized rate of 2.9% in the second quarter, contributing to a bounceback in gross domestic product following a disappointing winter. In May, spending rose a revised 0.7 per cent.

“Spending had a good Q2, even with some slowing in June”, said Jim O’Sullivan, chief US economist at High Frequency Economics.

Personal income rose 0.4% (0.3% estimated) and personal spending rose 0.2%. While consumer spending generally has been solid this year, tepid average wage growth has caused it to be choppy despite low gasoline prices and improved household finances.

For the full April-June quarter, consumer spending posted a solid gain, rising at an annual rate of 2.9 per cent, much stronger than the 1.8 per cent growth rate for spending in the first quarter.

PCE 0.3% vs. 0.2% exp y/y.

Projections for June consumer spending in the Bloomberg survey of 62 economists ranged from no change to a 0.4 percent increase.

Core personal consumption expenditures rose 0.2% month-over-month (0.1% estimated). Prices excluding food and energy are up just 1.3 per cent. That was up from a revised 0.6 percent GDP increase in the first quarter. “An increase in aggregate hours worked is expected to have supported a modest gain in personal income”.

The Fed last week described the economy as expanding “moderately”, upgraded its view of the labor market and said housing had shown “additional” improvement.

“Inflation is anticipated to remain near its recent low level in the near term”, the Fed officials repeated in a July 29 statement at the conclusion of their two-day meeting in Washington. A few economists believe further gains in the economy and an acceleration of inflation, which has been running below the Fed’s 2 per cent price target, will prompt officials to begin raising rates later this year.