American consumer spending marches higher in June
Washington (AFP) –
A spending spree by American consumers continued in June for the fourth straight month, as shoppers took home more new autos and furniture and dined out more frequently, government data showed Tuesday.
The healthy June bump in spending pointed to a pickup for the retail sector at the close of the second quarter and should support GDP growth.
The unexpectedly strong result comes as the Federal Reserve nevertheless prepares to cut benchmark lending rates at the end of this month for the first time in a decade out of a fear of a slowing global economy.
Sales rose 0.4 percent in June to a seasonally adjusted $519.9 billion -- more than twice the gain economists had expected, putting the retail sector up 3.4 percent over June of last year.
The increase was the same as in May, which was revised downward from a stronger 0.5 percent.
Auto sales jumped by a sharp 0.7 percent.
But there were sharp sales drops at gasoline stations, as well as for electronics retailers and long-suffering department stores.
When both the volatile auto and gasoline sectors are stripped out, sales were up 0.7 percent. When just the auto sector was removed, because of the steep drops in gasoline, sales were nevertheless up 0.4 percent -- also double the expected increase.
The retail sector suffered at the start of the year but the second quarter bounce comes despite the fading boost from 2017's tax cuts and as wages begin to rise amid historically low unemployment.
"These data won't stop the Fed easing on the 31st, though for the record we remain firmly of the view that the economy does not need lower rates," Ian Shepherdson of Pantheon Macroeconomics said in a note to clients.
Markets widely expect an interest rate cut of at least 25 basis points to be announced on July 31.
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