U.S. consumer spending surged last month as the economy grows stronger, said the government on Monday.
However, the housing sector recorded a slowdown, with a report indicating that Americans entered into fewer agreements to buy previously-owned homes.
Consumer spending grew 0.5 percent in August after stagnating in July, reported the Commerce Department. The growth in spending still remained 0.5 percent higher despite an adjustment for inflation. Personal incomes grew 0.3 percent, matching forecasts by analysts in a Reuters survey.
Most traders speculate the U.S. Federal Reserve may increase interest rates early 2015 in order to tame rising inflation. However, Monday’s report didn’t give much indicators of rising inflation pressures.
The U.S. central bank favorite inflation gauge rose 1.5 percent in the year through August, a slight decline from July, the data released by the Commerce Department revealed. The core inflation index, which is adjusted for the volatile food and energy costs, remained at 1.5 percent.
The U.S. economy appears to be gathering pace; with data released on Friday showing the gross domestic product expanded the most in 2 ½ years in the quarter through June. However, the President of the Chicago Federal Reserve Bank Charles Evans insisted on Monday that the central bank should hold raising rates for some time.
Evans’ pronouncements come after the National Association of Realtors reported that agreements to buy previously-owned homes in U.S. declined 1.0 percent. This shows the housing market is yet to fully rebound from the aftermath of the housing bubble that triggered the 2007-8 financial meltdown. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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