US consumer spending up 0.6%; incomes rise 0.3%

Sep 28, 2007 - US consumer spending rose 0.6 per cent in August as Americans shrugged off credit and housing market turmoil, government data showed on Friday.

The Commerce Department report was better than the 0.4 per cent rise expected by Wall Street analysts and showed that a key driver of US economic activity remained strong.

Personal income however rose a more modest 0.3 per cent, slightly below expectations of a 0.4 per cent gain.

A key inflation gauge in the report known as the personal consumption expenditures price index fell 0.1 per cent in August, and shows a 1.8 per cent rise over the past 12 months.

Core inflation, which excludes volatile food and energy costs, rose 0.1 per cent in August and 1.8 per cent in the past year.

Real disposable incomes, which are inflation-adjusted and measure income after taxes, rose 0.4 per cent in August after rising 0.5 per cent in July.

The report suggested that consumer spending, which represents two-thirds of US economic activity, held up in August even as credit conditions tightened in the face of concerns about a wave of failures of sub-prime mortgages.