WASHINGTON -- American consumers spent more in August, a positive sign for the U.S. economy which appears to have shifted into a higher gear.
The Commerce Department said Monday consumer spending rose 0.5 percent last month after being unchanged in July. The growth in August was just above the median forecast in a Reuters poll of a 0.4 percent gain.
"[The data are] a further signal that the positive momentum in domestic activity is being sustained," said Millan Mulraine, an economist at TD Securities in New York.
Even after adjusting for inflation, spending was 0.5 percent higher, the biggest gain since March. Growth in personal income ticked higher to a 0.3 percent gain, in line with forecasts. Some of the strength in spending came from a decrease in the saving rate, which eased back from a 1½ year high in July.
The data reinforce the view that the U.S. economy will finish this year firing on nearly all cylinders, and the dollar pared an earlier decline following the report's publication.
Most investors are betting the U.S. Federal Reserve could raise interest rates next year to keep inflation in check, though Monday's data gave little sign of growing price pressures.
The Fed's preferred gauge of inflation was up 1.5 percent in August from a year earlier, down slightly from the reading in July, the Commerce Department data showed. A measure of underlying price pressures which strips out food and energy held at 1.5 percent. That reading had dipped to 1.2 percent earlier this year.
Some policymakers at the U.S. central bank remain concerned that inflation remains stuck well below their 2 percent target. Chicago Fed President Charles Evans said on CNBC television Monday that the Fed should patiently seek to push inflation up to its target so it doesn't have to "backtrack" after raising rates.
Data released Friday showed the U.S. economy grew at its fastest pace in 2½ years in the second quarter with all sectors contributing to the jump in output.
Relatively strong consumer spending during the period was taken as a sign the economy's recovery from the 2007-09 recession is becoming more durable.
The 5 Worst Retail Data Breaches
Consumers Went on a Shopping Spree in August
Affected: 56 million cards.
Duration of compromise: Five months.
Tactic: Malware was installed to skim payment card data; unclear how hackers found an entry into the company's network.
Analysis: "Home Depot's situation is not only a PR nightmare for the home improvement colossus, but it is becoming the poster child for poor security practices across the board. Based upon the enormity of their footprint and alleged poor security, I'm mystified that it took as long as it did for them to be breached. Clearly, they did not heed Target's Paul Revere moment with sufficient urgency."
Affected: 40 million payment card numbers and 70 million other pieces of customer data; 98 million people.
Duration of compromise: Nov. 30 to Dec. 15, 2013.
Tactic: Used credentials of a heating, ventilating and air conditioning vendor to get into Target's network to install the malware to point of sale systems.
Analysis: "In a nation where everything is super-sized, Target (TGT) was one of the first true big-box retailers thrust into the spotlight after their mega breach. While a number of their executive team members have walked the plank and their board is the target of litigation, and their bottom line and share price have taken a hit, the breach highlights the importance of scrutinizing every vendor's security practices – or at least looking into cyber insurance to mitigate the damage of a vendor caused breach. This was a Paul Revere moment for the retail industry. Unfortunately, recently announced retail mega breaches indicate that not enough organizations have taken it as seriously as they should have."
Affected: As many as 200 of its grocery and liquor stores and millions of cards; credit/debit account information possibly stolen.
Duration of compromise: Almost one month.
Tactic: Network access to system that processes transactions.
Analysis: "Little information about this breach has surfaced, but one can only suspect the tactic was similar to that of other big breaches -- POS malware. And according to Avivah Litan, a fraud analyst at information technology firm Gartner, when someone uses a debit or credit card, there's a one in five chance malware is capturing that information. Although Supervalu (SVU) execs say it's not clear if account information has been stolen, scary stats like this suggest otherwise."
Affected: 3 million customer credit and debit cards (they also had a breach in 2011 where skimmers were installed on about 70 POS systems and financial information was stolen). Affected systems contained certain payment card information, such as credit/debit card number and expiration date, about both Michaels and Aaron Brothers customers. The company says there is no evidence that other customer information, such as name, address or debit card PIN, was at risk in connection with this issue, however, current automated bank systems make it all to easy to change debit card pin numbers.
Duration of compromise: Two separate eight-month-long security breaches.
Tactic: POS malware.
Analysis: "Unfortunately, in the breach lottery Michael's hit the exacta -- old-school skimmers installed in the dead of night on their POS systems did the trick in the first breach, and the now-popular POS malware scorched them for a second time -- for 3 million. Two high-profile breaches in a couple of years isn't a goodwill builder for the craft giant."
Affected: Usernames and passwords of employees and users.
Duration of compromise: Unknown.
Tactic: The origin of the breach comes from hackers compromising a small number of employee log-in credentials, which gave access to eBay's (EBAY) corporate network. EBay says it is working with law enforcement and leading security experts to "aggressively" investigate the matter. Appears to be from a phishing email.
Analysis: "Sophisticated spear phishing scams can turn even the most savvy and sophisticated employee into an unwitting co-conspirator. Comprehensive, continuous security training for all employees, implementation of tough security protocols, use of intricate passwords and rigorous outside testing and monitoring can help avoid a reputation damaging breach."