WASHINGTON – U.S. consumer spending (search) was unexpectedly flat in August, government data showed on Thursday, as shoppers exercised restraint after splashing out even more than previously thought during the previous month.
Personal spending was unchanged after climbing a revised 1.1 percent in July, the Commerce Department (search) said. This had been initially reported as a 0.8 percent gain.
Personal income picked up from July's tepid performance, posting a 0.4 percent rise compared with 0.2 percent the previous month, revised from the 0.1 percent gain initially reported.
Analysts polled by Reuters had forecast consumption to rise 0.1 percent and income to gain 0.3 percent after an increase in hours worked, with modest retail sales and a steep fall in auto sales forewarning of a slowdown in August spending.
Analysts expect a rebound in spending to underpin stronger growth in the second half of the year after the economy hit a soft spot earlier in the year.
U.S. second-quarter gross domestic product growth slowed to 3.3 percent from 4.5 percent in the previous three months after soaring oil prices dented household incomes and took the shine off shopping.
As a result, this week's renewed advance in U.S. crude prices above $50 per barrel has rekindled concern that the economic expansion will be checked.
Spending on durable goods, including costly items like cars, sank 1.6 percent in August, paring July's 6.2 percent surge. This was revised up from the 4.1 percent jump initially reported. Nondurable spending advanced 0.2 percent after gaining 0.3 percent the previous month.
The Commerce Department said that the impact of Hurricane Charley (search), which slammed the southeast causing extensive damage, reduced rental income by about $11 billion. But it said this was largely offset by a roughly $12.5 billion rise in business transfers to reflect insurance payouts.