MW: Spending soars at 8-year high on clunkers program
Real disposable incomes fall 0.2%, the third decline in a row
WASHINGTON (MarketWatch) - Encouraged by government subsidies to buy cars, U.S. consumer spending soared 1.3% in August, the fastest increase since the post-9/11 shopping binge eight years ago, the Commerce Department estimated Thursday.
Spending on durable goods rose 5.3% in August as auto sales surged on the government's cash-for-clunkers program. The clunkers program accounted for most of the increase in August, the government said. The program ended in August, and most analysts expect that the boost in spending was a one-time event.
After adjusting for inflation, real consumer spending rose 0.9%, also the biggest gain since October 2001, when automakers slashed prices after the terror attacks.
Consumer prices rose 0.3% in the month and were down 0.5% in the past year. Prices excluding food and energy rose 0.1%. In the past year, these so-called core prices are up 1.3%, the slowest core inflation rate since September 2001.
Meanwhile, personal incomes edged higher by 0.2%. After taxes and after adjusting for higher prices, real disposable incomes fell 0.2%, the third decline in a row.
Nominal incomes and spending increased a bit more than expected. Economists surveyed by MarketWatch looked for incomes to rise 0.1% and spending to rise 1%.
In July, nominal incomes rose 0.2%, revised up from no change. Nominal spending rose 0.3% in July, unrevised.
With spending rising much faster than incomes, the savings rate fell back to 3% of disposable income in August, the lowest since October 2008.
Compensation of employees rose 0.2% in August. Wages and salaries increased 0.2% for the second month in a row after falling every other month this year.
Incomes from assets fell 0.9%. Small business income rose 0.5%. Rental income rose 2.1%. Income from transfer payments increased 0.6%.
Real spending (inflation-adjusted) rose 5.8% in August. Real spending on nondurable goods increased 1%, the first gain since February. Real spending on services rose 0.2%, the biggest increase this year.
