NEW YORK, Aug 29 (Reuters) - U.S. consumer spending
rebounded strongly in July to post the largest increase in five
months on strong demand for motor vehicles, a government report
showed on Monday, supporting views the economy was not falling
back into recession.
STORY: TABLE
COMMENTS:
BRIAN LAZORISHAK, PORTFOLIO MANAGER AT CHASE INVESTMENT COUNSEL
IN CHARLOTTESVILLE, VIRGINIA
'My early take is that this is neutral to slightly
positive. Consumer spending has been focused on the past couple
of months, so any kind of strength there is a good thing for
the economy and the market.
'Doesn't seem to be much of an impact. I imagine getting
through Irene without any major negative was enough to have the
early lift. This data might help a little.'
RUDY NARVAS, SENIOR ECONOMIST, SOCIETE GENERALE, NEW YORK
'It was better than expected after a couple of soft months.
The three-month annual rate has come down a bit but it is a
pretty good sign for July, and if you look at the real dollars,
real dollars are firm too. With oil prices coming down it has
really given a boost to the personal spending.'
JEFFREY GREENBERG, ECONOMIST, NOMURA SECURITIES, NEW YORK
'The biggest surprise was the jump in personal spending. We
were looking for half a percent and we got 0.8 percent. It's
the biggest since 2009. It looks like this spending boost in
July is durable goods and it's most likely vehicle sales.
'This could imply some upward revisions to Q3 GDP. If
anybody was concerned about this recession risk people were
taking about, this personal spending number seems to be another
point against that recession argument. It seems at least
through July, the economy was not too poor.
'I'd say given that core PCE is running at a pace that's
approaching the Fed's 2 percent mandate it means any action the
Fed's going to have to take has to address both sides of the
mandate. It makes it a lot harder for the Fed to act when
there's no deflation risk as there was at this time in 2010.'
VIMOMBI NHSOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON
REUTERS
'Personal income's 0.3% increase in July was aligned with
recent trend however, spending's above-trend growth of 0.8% was
markedly above forecasts and the largest increase since in
nearly two years (Aug '09, 1.2%). Revisions to June figures
were minimal, with income up from 0.1% to 0.2%, and spending
still recorded as falling 0.1%. Disposable income matched the
headline's rise of 0.3%. The $42.4 bln change in income was
boosted by a $24.2 bln rise in wages, about three times better
than June's performance (which had originally been reported as
a decline of $2.6bln). Other sources of income were modestly
positive such as supplements ($3.7 bln), rental ($5bln), and
receipts on assets ($7.5bln). Each an improvement from June.'
'The savings rate fell to 5% from 5.5%.'
MARKET REACTION:
STOCKS: U.S. stock index futures held onto earlier gains.
BONDS: U.S. Treasuries prices add to losses.
FOREX: The dollar held steady versus the euro and
maintained slight gains versus the yen.
Keywords: USA ECONOMY/INSTANT
(Americas Economics and Markets Desk; +1-646 223-6300)
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