WASHINGTON (AP) - Americans boosted their spending in August even though their income barely grew. Much of the spending increase went to pay higher gas prices, which may have forced consumers to cut back elsewhere.
The Commerce Department said Friday that consumer spending rose 0.5 percent in August from July. It was the biggest jump since February.
Gas prices rose nearly 50 cents per gallon in July and August, but have since leveled off. Excluding the impact of higher gas prices and other price gains, spending ticked up only 0.1 percent last month.
Income grew only 0.1 percent, too. But after accounting for inflation and deducting taxes, income actually fell 0.3 percent - the poorest performance since November.
In this Wednesday, Aug. 22, 2012 file photo, a shopper pushes a trolley through the clearance section of a store in Chicago. Americans spent at the fastest pace in six months in August but much of that increase went to pay their higher gas bills, the Commerce Department announced Friday, Sept. 28, 2012. (AP Photo/Sitthixay Ditthavong, File)
I don't see energy prices going down considerably in the near future. When you include all the tariffs and fees on electricity, etc., consumer spending in that direction will increase.
Food prices, (and smaller packaging) will continue to rise with a major spike coming from the various droughts. We can probably expect another article noting how consumer spending has gone up again, with the same kind of punchline.
The vice that corporations and companies have now on an "employer's" market, along with the implications of lower labor costs in producing countries, any realistic, cost-of-living increase in wages are nothing to hold your breath over. Though small sectors will of the wealthy and connected will receive very generous increases in income.