Fewer auto sales dent consumer spending in August, inflation still weak, PCE shows
By Jeffry Bartash, MarketWatch
Consumer spending rises scant 0.1% in August, core PCE softens
The numbers: Consumer spending rose 0.1% in August. Economists polled by Marketwatch had forecast a 0.1% increase. If adjusted for inflation, however, spending fell for the first time since January.
Personal income climbed 0.2%, above the 0.1% forecast. The savings rate was flat at 3.6%.
The PCE index, the Federal Reserve's preferred inflation gauge, increased 0.1% in August. The closely followed "core" rate that strips out food and energy edged up 0.1%. Neither index rose on a yearly basis.
What happened: Consumer spending slowed in August largely because of fewer sales of new cars and trucks. Auto sales dropped 1.8% last month. Hurricane Harvey may have also been a drag on the economy.
Inflation remained subdued. The 12-month rate of PCE inflation was unchanged at 1.4%. The core rate fell a tick to 1.3% -- the lowest level since November 2015. Both are well below the Fed's 2% target.
Big picture: The most important takeaway is that inflation remains stubbornly low. The Fed plans to raise interest one more time in 2017 and three times in 2018, but the bank might have to reconsider unless inflation tracks higher again.