July consumer spending up 0.3%

29 Aug 2015 | Author: | No comments yet »

Americans Step Up Spending.

Weak inflation continues to complicate things for the Federal Reserve as it weighs whether the economy is healthy enough to begin raising short-term interest rates. The 0.3 percent increase is below economists’ predictions of a 0.4 percent jump for July, but followed closely behind the revision of June data up to a 0.3 percent increase. The price index for personal consumption expenditures, the Fed’s preferred inflation gauge, rose a seasonally adjusted 0.1% last month, compared with a 0.2% increase in June, the Commerce Department said Friday.

The report suggests that consumer spending, which accounts for 70 percent of economic activity, got off to a good start in the third quarter as strong momentum from the second quarter rolled into July. A long stretch of strong job creation, rising home values and a dive in energy costs are strengthening the financial standing of households, who are in turn fueling the economy’s expansion. Excluding volatile energy and food, prices are up just 1.2 percent over the past 12 months, far below the Fed’s goal of having prices rise at an annual rate of 2 percent. When adjusted for inflation, consumer spending rose 0.2 percent; it was flat in June. “We score this report as a solid adjunct to yesterday’s strong G.D.P. report that should encourage members of the Fed’s policy-making committee that income and spending fundamentals remain in good shape,” said John Ryding, chief economist at RDQ Economics in New York. That helps explain why the U.S. continues to post steady, if unspectacular, growth, while China’s once-juggernaut economy stumbles and Europe muddles along.

The company is testing a feature in the San Francisco area that lets local businesses promote their services in a special box at the top of some search results, Google said on a Web site Friday. Economists say that underlying strength — also highlighted by a rebound in business spending, and buoyant housing and labor markets — gives the economy muscle to weather the fallout from the market rout. And the three-month annualized pace fell to 1.7% from 1.8%. “The weakening domestic inflationary backdrop will come as a disappointment to Fed officials who are becoming increasingly concerned about the subdued inflationary tone,” said Millan Mulraine, deputy chief U.S. economist for TD Securities, in a note to clients. “The fact that the core PCE rate is again beginning to move in the wrong direction could add to the case for a ‘wait and see’ stance at the September [Fed] meeting,” he added. Using the Web to find local services isn’t new, with Amazon.com recently moving into the market to compete against more established providers such as Yelp and Angie’s List. The consumer spending data was the latest report indicating momentum in the economy as it confronted global markets turbulence, sparked by concerns over a slowing Chinese economy, which has diminished the chances of an interest rate increase next month.

Google is expanding into different areas as it seeks ways to boost user traffic and advertising dollars. “From unclogging the bathroom sink to getting back into a locked apartment, there are moments throughout the day when people need a quick solution to a big problem,” Google said. “Customers can read detailed reviews, submit a service request, or call your business directly for more information.” ● Ian Rogers, a key figure in Apple’s new streaming music service, is leaving the company. The topic this year is “Inflation Dynamics and Monetary Policy,” an apt subject given the strangely subdued state of inflation in many advanced economies, including the U.S. Still, the index remained at levels consistent with a 2.9 percent growth pace in consumer spending this year. “We continue to see relatively stable buying intentions as a positive for consumer spending activity in the months to come. It showed Americans continued to step up their spending last month amid a healthy pickup in wages, data that could encourage Fed officials to believe the economy was on a firm footing last month, before a recent bout of volatility in world markets. Prices for energy goods and services rose 0.1% in July from the previous month—stalling after two months of strong gains—and are still down 15.7% from a year ago, Friday’s report showed.

A person familiar with the matter confirmed reports that Rogers was planning to move to Europe to work with a luxury brand. ● Russian President Vladimir Putin signed a decree Friday that is likely to place Moscow’s second-largest airport, Sheremetyevo, under the control of Arkady Rotenberg, a businessman who is a Putin friend, an industry source said. Louis President James Bullard, in an interview on the sidelines of a Fed economic symposium in Jackson Hole, Wyo., pointed to a string of positive economic readings and said recent market volatility hadn’t changed his outlook for the economy. “We have very good fundamentals,” he said. “We have good labor-market data. The income increase was predictable, as it has increased the last four months; however, the wage and salary increase last month was the largest since November 2014. We’ve just received some pretty good growth data.” A separate report Friday, the University of Michigan’s index of consumer sentiment, showed a dip in consumer confidence to a reading of 91.9, which is still relatively high. Rotenberg’s businesses range from infrastructure projects to telecoms. ● The Brazilian government says gross domestic product contracted for the second consecutive quarter, sending the economy of Latin America’s biggest country into a technical recession.

IBGE said the biggest drop was in the industrial sector, where construction output fell 8.4 percent. ● Strong winds and high waves that pounded the northern coast of Alaska have led Royal Dutch Shell to temporarily stop exploratory oil drilling in the Arctic Ocean. “Due to high wind and sea states, we have paused all critical operations in the Chukchi Sea,” spokesman Curtis Smith said. For now, July’s growth in spending and incomes supports early forecasts that the economy will expand at a modest but stable 2%-3% annual rate in the current quarter. The bulk of last month’s spending increase was due largely to higher purchases of durable goods—big-ticket items such as cars and kitchen appliances—which climbed 1.1%.

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