Highest Inflation in 30 Years is Taking a Toll on Consumer Spending

Summary Despite the highest inflation in more than 30 years, consumer spending is plodding forward. After adjusting for inflation, the 0.8% increase in personal spending was cut in half to a 0.4% real increase. That was not enough to offset the 0.5% decline in real PCE revealed in the revision to July. Third quarter consumer spending is on track for only a scant gain. Spending Clearly Downshifted in Summer Months There is a lot to unpack on the spending side of today’s report. Technically, the outturn was better-than-expected, with a 0.8% monthly increase and both goods and services spending contributing to the headline. But this apparent surge in August needs to be taken in context with the fact that July spending was revised from a modest gain to a slight decline in spending. Even with a decent spending increase in September, the annualized rate of third quarter consumer spending will be doing well to come in up more than 1% or so. READ FULL ARTICLE>>