U.S. personal spending rose in August by more than forecast as underlying inflationary pressures held steady. Inflation-adjusted consumer spending rose by 0.4% for a second month.

Washington

Recent economic data from the United States indicates that personal spending increased by 0.6 percent, surpassing forecasts of a 0.5 percent rise. The core Personal Consumption Expenditures (PCE) price index, a key measure of inflation, matched expectations with a 0.2 percent increase, showing little change from previous months.

Personal income also grew by 0.4 percent, while wages and salaries rose by 0.3 percent, slightly lower than the previous month's gain. Despite the introduction of new tariffs, consumer spending remains robust, supporting the broader economy. The data suggests that American consumers continue to drive economic growth, even as inflation and income growth remain steady.

U.S. personal spending rises more than expected in August

Well, the markets are basically not expecting a huge change, and we don't really get a huge change, although the PCE price index for the month of August is up at three-tenths, which is, as forecast, a little higher than it was last month, puts the year-over-year rate at 2.7 percent, just as forecast, and the core rate comes in at two-tenths, same as forecast, a little lower than last month, and that leaves us at 2.9 percent. So no real change in the inflation picture, although, as we talked about with Tom Barkan earlier today, it's not getting any better, it's just not getting any worse in the month of August. Personal income up four-tenths of a percent. What we need to do here is see what the wage and salary component of that is, and I'll check that out. But personal spending comes in stronger than anticipated, up six-tenths of a percent. The forecast was for five-tenths, it was five-tenths last month. So far, no revision. Let's see what we get in the next few minutes, but basically, it shows the American consumer hanging in there, and it looks like they have the incomes to do that, and maybe the economy is a little stronger than expected, which takes us back to Mr. Barkan and what he said about the downside risks maybe are a little bit less prominent than they were before we got the revisions yesterday to GDP and before we get these numbers today. Mike, you've had a couple of seconds to look through all of the information. Does anything stand out to you? Well, one thing that stands out, Lisa, is that personal income wages and salaries were up three-tenths in August. That's a climb down from what we saw in July, a half-percent gain. But does that mean that we're going to suddenly turn cold? Hard to know. It'll depend on the continuation of all this, whether people still feel they have the money. Of course, we did get all these additional tariffs overnight, so that's going to be a question of how people react to that. I'm not sure that tariffs on some big trucks are going to cause people to cut back on spending, but it might affect business spending. If we do see tariffs continue to be put on goods, especially on prescription drugs, that could have an impact on confidence, which is a little tease ahead to 10 o'clock this morning Eastern time when we get the Michigan confidence figures. Thank you so much for breaking that all down. If you're just joining us right now, we did get that core PCE figure, which came in bang in line, 0.2 percent increase following a 0.3 percent the prior month. It was revised downward for the prior month, 0.2 percent personal income and personal spending. That's where it gets pretty interesting to me, the idea that you could get an upside surprise on both, particularly personal spending, 0.6 percent increase versus a 0.5 percent increase expected, and real personal spending increasing 0.4 percent versus a 0.2 percent expected. It was actually revised upward in the prior reading as well, Anne-Marie. It seems like people keep spending, and that has been the engine that keeps on giving to the American economy. People keep spending, jobless claims yesterday, very strong number, and now when it comes to PCE, bang in line. What is there actually, you look at the data like this, what is there actually to worry about? Is PCE spending though increasing? I do wonder how many people are like members of my family who went out concerned about the tariffs and are continuing to spend now, and they are concerned about the holidays coming up, and they don't want the prices to go up, so they're willing to go out and spend a ton now. I guess it remains to be seen.

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