"It's difficult for consumers to increase their spending as Americans face "concern about the stability of the labor market, whether they're going to have their jobs"
- Gus Faucher, senior economist at PNC Financial Services Group Inc.
After an upbeat growth report on Thursday, news that consumer spending in the world's largest economy rose less than initially was expected was unexpected by market participants. Purchases made by Americans account for around 70% of the economy and the fact that they rose only 0.1% in July, after a revised 0.6% gain in the prior month is suggesting the things may not be as bright as it seems. Analysts, however, expected a rise of 0.3%. In the meantime, incomes advanced 0.1%, compared with a 0.3% increase a month earlier.
Despite signs of a pickup, the economy should create more jobs, while wages should rise more in order to help consumer spending overcome weak global demand. Moreover, constantly rising mortgage rates are posing a threat to derail the household purchases of appliances and automobiles. Meanwhile, some retailers expected demand to strengthen soon.
Many analysts suggests faster job gains should drive the wage increase. American employers probably added 180,000 jobs in August, a report on September 6 to show. The pace of hiring in the United States averaged 197,500 per month during the first half of the year.
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