US consumer spending rose in July more than it had in five months. Another report showed that unemployment claims are beginning to stabilize.
The two reports signify that consumers may be feeling more confident about their employment situations and also more confident about spending as a result.
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The Commerce Department said personal consumption increased .4% over June. That increase matched the estimates of the economic survey by Dow Jones Newswires.
The savings rate fell to 4.2% from 4.3%. Savings had been at the highest rate over a one-year period.
Inflation continues to be moderate. This gives the Fed room to take action
if it still feels the economy needs a jumpstart as it meets on September 12 and 13. The price index for personal consumption increased 1.3% on a year-over-year basis in July.
This is well below the Fed’s target of 2%. The index was basically unchanged from month to month, increasing only .1% in June.
Fed officials indicated recently that they are willing to take action unless the economy shows substantial signs of improvement.