Consumer spending and pending home sales surged in August, but the increases were substantially driven by government stimulus that has, or is about to, expire. Income gains were modest.
Separately, more Americans sought jobless benefits last week and a key gauge of the U.S. factory sector slowed in September, adding to concerns about the economy's fragile recovery.
The Commerce Department reported Thursday that U.S. consumer spending increased by 1.3% in August compared with July and personal income rose 0.2%. The jump in spending was the largest since a 2.8% increase in October 2001 and exceeded Wall Street expectations.
The big gain was driven by higher gasoline prices, back-to-school sales and the "cash for clunkers" government voucher program that let motorists swap gasoline guzzlers for newer car models. But the government stimulus, an attempt to fuel the economy's rise out of recession, expired in late August.
Listless spending the rest of the year would mute the recovery from the long recession because what consumers do with their wallets makes up a big part of the U.S. economy.
1 comment:
It is great to see that consumer spending exceeded expectation in August! But everything has been spurred by the government and as soon as their programs or incentives end everything returns to the way it was before the programs started.
I feel like the government either needs to stay out of the way of recovery completely or be completely emerged into until the crisis is officially over. Because the same things are going to keep happening over and over again if the government does not change the way it is doing things.
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