Consumer Spending | featured news

U.S. consumer spending rose in August as households stretched to pay for higher gasoline prices and factory activity in the Midwest contracted this month for the first time in three years, pointing to lackluster economic growth.

U.S. consumer spending got off to a fairly firm start in the third quarter, rising by the most in five months and offering hope economic growth would pick up this quarter. Other data on Thursday showed the number of Americans filing new claims for jobless benefits held steady last week.

The U.S. economy grew at a tepid 1.7 percent annual rate in the April-June quarter, suggesting growth will stay weak in the second half of the year. Slightly stronger consumer spending and greater exports were the main reasons the Commerce Department reported Wednesday that growth was better than its initial estimate of 1.5 percent. Still, growth has slowed from the 2 percent annual rate in the January-March quarter and the 4.1 percent rate in the fourth quarter of 2011.

In an effort to follow trends, students and their families are delaying back-to-school purchases, which could hurt an economy heavily dependent on consumer spending to stay afloat.

As the Federal Reserve meets Tuesday and Wednesday to consider new stimulus for the weak economy, one of the key data it will be looking at is consumer spending, which is clearly waning.

Consumer spending was flat in May for the first time in five months as Americans eased off on vehicle purchases amid tepid wage growth, but subsiding inflation pressures should keep demand supported.

U.S. retail sales declined in April and May, pulled down by a sharp drop in gas prices. But even after excluding volatile gas sales, consumers barely increased their spending... Americans did spend more in May on big purchases. Sales of cars, furniture and appliances all increased. That suggests consumers may be gaining more confidence in the economy.

Consumer spending edged up modestly in April but personal income growth was the slowest in five months, raising concerns about the ability of Americans to keep spending in the future.

The financial shocks that began in 2007 prompted a lot of Americans to change their free-spending ways, especially when it came to taking on debt. Several years on, some Americans may be reversing course, either by choice or necessity.

Americans increased their spending more slowly in March, raising questions that consumers could be worried about the economy. The Commerce Department says consumer spending increased just 0.3 percent in March after a 0.9 percent gain in February. Income grew 0.4 percent following a 0.3 percent gain in February.