US consumer spending in July surges; weekly jobless claims fall
WASHINGTON (Reuters) — U.S. consumer spending accelerated in July, but slowing inflation strengthened expectations that the Federal Reserve would keep interest rates unchanged next month.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.8% last month, the Commerce Department reported on Thursday. Data for June was revised up to show spending rising 0.6% instead of 0.5% as previously reported.
Economists had forecast spending increasing 0.7%.
Spending was boosted by outlays on both goods and services. Slowing inflation and a still tight labor market, which is keeping wage gains elevated, are supporting consumer spending and propping up the economy.
The government reported on Wednesday that the economy grew at a 2.1% annualized rate in the second quarter with consumer spending more than offsetting the drags from trade, an inventory drawdown and persistent housing market weakness.
Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25%-5.50% range. Financial markets expect the U.S. central bank will leave its benchmark overnight interest rate unchanged at its Sept. 19-20 policy meeting, according to the CME Group's (NASDAQ:CME) FedWatch Tool.
Inflation as measured by the personal consumption
expenditures (PCE) price index rose 0.2% last month, matching June's gain. In the 12 months through July, the PCE price index increased 3.3% after advancing 3.0% in June.
Excluding the volatile food and energy components, the PCE price index gained 0.2%, after climbing by the same margin in the prior month. The so-called core PCE price index increased 4.2% year-on-year in July after rising 4.1% in June.
The annual PCE inflation rates were lifted
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