- Michael Carey, chief economist for North America at Credit Agricole CIB
The latest U.S. Commerce Department numbers indicated a slight decrease in consumer spending, falling behind experts' forecasts, following continuous growth in six-month period before. Experts explain the phenomena by stating that households are lagging behind as wages fail to accelerate. Household spending decreased by 0.1% in July compared to an expected increase of 0.1%, after edging up 0.4% in June. Spending on durable goods declined by 0.6%, following the 0.5% increase in June. Spending on non-durable goods, such as fuel and clothing, fell by 0.2%, while spending on services decreased by 0.1%. Prices related to consumer spending surged by 1.6% year-on-year in July. However, Federal Reserve policy makers predicted an annual increase of 2%. The core price category, which excludes items such food and fuel, inched up by 0.1% in July, and ended at 1.5% year-on-year.
Another data release by U.S Commerce Department reported an increase in personal income by 0.2%, yet falling short behind experts' forecast of a 0.3% increase and following an upwardly revised gain of 0.5% in June. Additionally, data provided clear evidence that income grew faster during the second quarter beating experts' predictions, from 0.4% to 0.5%, respectively. However, March and February readings were revised down. Furthermore, data reports that income from investments grew at the slowest pace since January; rental income rallied up by 0.9% and wages grew at the slowest pace in three months.
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