U.S. consumer spending picked up a bit in July as households bought more automobiles, offering further evidence of strength in the economy that could keep the door open to a Federal Reserve interest rate hike this year.
As reported by Reuters, the Commerce Department said on Friday consumer spending increased 0.3% after an upwardly revised 0.3% rise in June. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was previously reported to have gained 0.2% in June.
Economists polled by Reuters had forecast consumer spending rising 0.4% last month.
It was the latest report indicating momentum in the economy as it confronted recent global financial markets turbulence, sparked by concerns over a slowing Chinese economy, which has diminished the chances of an interest rate increase next month.
New York Fed President William Dudley said this week that prospects of a September lift-off in the central bank’s short-term interest rate “seems less compelling to me than it was a few weeks ago.”
Some economists, however, believe the U.S. central bank could still raise interest rates in September if financial markets settle down and the streak of fairly strong data continues.
Economists say that underlying strength, also highlighted by a rebound in business spending, buoyant housing and labor markets, as well as bullish consumer confidence, gives the economy muscle to weather the fallout from the markets rout.
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