Consumers boosted their spending in July by a seasonally adjusted 0.4%, according to the latest Commerce Department data. That was the biggest gain in five months, as aftertax incomes continued to grow modestly. The increased spending was in line with consensus expectations.
Personal income rose 0.3% for the third-straight month, and aftertax income increased by the same amount in July. The U.S. savings rate fell to 4.2% in July from the previous month, the highest rate in a year.
Consumer spending is the largest single source of growth in the U.S. economy. The high unemployment rate and the weaker global economy are among the factors holding consumers back. The Conference Board's consumer-confidence index, released earlier this week, fell sharply in August to its lowest level in nine months, lending support to the notion that Americans are more anxious.
But, as we noted this morning, retailers that reported August same-store sales today mostly indicated growth in their sales. Target Corp. (NYSE: TGT) said same-store sales rose 4.2% year-over-year. Gap Inc. (NYSE: GPS) reported same-store sales were 9% higher, and Costco Wholesale Corp. (NASDAQ: COST) said its same-store sales climbed 6%.
Treasury prices rose this morning after the release of this data and a report indicated U.S. first-time jobless claims were unchanged at 374,000 last week. The dollar fell against the euro, though traders are also awaiting a Friday speech from Federal Reserve Chairman Ben Bernanke.
Filed under: 24/7 Wall St. Wire, Economy, Retail Tagged: COST, featured, GPS, TGT