- Gregory Daco, head of U.S. macroeconomics at Oxford Economics USA
US consumer spending rose in August at a healthy pace, suggesting a strong domestic demand that could prompt Fed policy makers to raise interest rates on Thursday. According to the Commerce Department, sales at retail stores and restaurants climbed a seasonally adjusted 0.2% in the reported month, following a revised 0.7% growth in July. At the same time, core retail sales inched up 0.1%. Measured on an annual basis, retail turnover increased 2.2% in August. Consumer spending accounts for around 70% of economic activity in the US and represents a key gauge of the economy's health. Retail sales represent a major piece of overall consumer spending. Robust spending in the spring helped the world's number one economy expand at an annual rate of 3.7% in the second quarter. A separate report from the Commerce Department showed that broad-based consumer spending increased 0.3% in July, roughly the same pace as June.
Fed officials are looking for encouraging signs as they weigh whether to raise interest rates this week for the first time in almost a decade. Higher interest rates would suggest that the central bank considers the US economy is on a solid growth path.
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