Americans get back to their spending ways. Economy might be speeding up again.

By Jeffry Bartash

U.S. economy is coping with high inflation

New Apple CEO John Ternus (L) meets with customers at the launch of new phones and other products.

Consumer spending snapped back in August after a brief lull, adding to mounting evidence of an acceleration in the U.S. economy despite a series of strains.

Personal spending surged 0.9% last month, the government said, after barely any increase in July. Americans bought more new cars and boosted spending at restaurants and clothing stores.

Yet the necessities of life - including gas, healthcare and auto repair - were also more expensive.

Incomes also rose 0.3% in the month, keeping up with inflation, if just barely. Americans can keep spending at or close to current levels as long as their incomes continue to match or exceed the rise in consumer prices.

Key details: New car sales drove much of the increase in spending last month. People buy more big-ticket items like cars when they have confidence in the economy or security in their own jobs.

"Having a job enables confidence to keep spending despite inflation headwinds," said Kathy Bostjancic, chief economist at Nationwide.

On the downside, spending also got a boost from an increase in gas prices after the U.S. and Iran resumed hostilities.

The savings rate fell to 4.1%, from 4.6% in the prior month, and is on the lower side historically. Households have had to dip into savings more to offset the high rate of inflation.

Consumer spending is the main engine of the U.S. economy. Spending in the spring grew at a surprisingly strong pace and it looks like the third quarter will follow suit.

Big picture: The economy is still growing steadily after six years of expansion - even stubborn inflation hasn't been able to slow it down much.

Yet a series of shocks - tariffs, war, high oil prices, rising interest rates - have kept the economy from performing even better.

Looking ahead: "The economy is charging on in spite of higher rates and energy prices," said Mark Streiber, economic analyst at FHN Financial.

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX rose in Wednesday trading.

-Jeffry Bartash

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

09-30-26 1008ET