U.S. consumer spending rose to a five-month high in July as auto sales rose sharply providing some evidence that the economy continues to defy those suggesting a recession is inevitable. According to the Commerce Department, consumer spending rose 0.8 percent in July after a 0.1 percent decline the month before.
Source: Reuters
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:
PETER BUCHANAN, ECONOMIST, CIBC WORLD MARKETS, TORONTO
'The major surprise was in personal spending. While markets
have been looking for some improvement in that area after a
dismal Q2 performance, the 0.8 percent rise was three ticks
above the consensus, with June's unwelcome decline being scaled
back a tick to -0.1 percent.
'In real terms, spending was up 0.5 percent from June's
level. While the consumer's somewhat better showing starting
off the quarter is potentially somewhat better news, it remains
to be seen whether July's improvement will carry over into the
months ahead. Confidence fell precipitously in the wake of the
debt deal and credit downgrade and expectations for this
Friday's payrolls suggest job creation remains weak.
Notwithstanding that, today's numbers are a plus for stocks and
the U.S. dollar, and slight negative for fixed income.'
DAVID ADER, HEAD OF GOVERNMENT BOND STRATEGY, CRT CAPITAL
GROUP, STAMFORD, CONNECTICUT
'The headlines were a tad better than expected on the
spending side, with that a function of a decrease in savings.
The income figures were less impressive though with real
disposable income slipping 0.1 percent and real incomes flat
after transfer payments raising for us the question of where
further consumption gains come from if not better incomes. The
(Treasuries) market is little changed to a tad lower as you
move out the curve.'
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)
COPYRIGHT
Copyright Thomson Reuters 2011. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
BUENOS AIRES, Aug 29 (Reuters) - Argentina's 2012 budget bill aims to cap public spending growth at 20 percent, below current rates of more than 35 percent, as state expenditure surges ahead of the October presidential election, according to a newspaper report on Monday.
The center-left government of President Cristina Fernandez, who looks almost certain to be re-elected, must submit its budget bill for next year to Congress by Sept. 15.
Financial daily El Cronista said Economy Ministry officials informed different ministers that spending growth should not exceed 20 percent in 2012, adding that government departments would then be able to seek extra funds to cover basic needs.
Argentina's budgets in recent years have low-balled inflation, growth and revenue, allowing the government to spend 'additional' income without congressional oversight.
Last year's budget bill, which was never passed by the opposition-controlled Congress, estimated that total primary spending would jump just 17 percent this year.
El Cronista, which cited a source close to Treasury Secretary Juan Carlos Pezoa, said the 2012 budget bill forecasts inflation of less than 10 percent.
Previous budget bills have also estimated inflation at a similar level despite sharp criticism from opposition lawmakers and private economists, who say true inflation is running at more than 20 percent.
El Cronista said the budget would estimate growth next year of four percent, below the 5 percent forecast recently by the deputy economy minister. Growth this year is estimated at more than 8 percent.
(Reporting by Helen Popper; Editing by Padraic Cassidy)
) Keywords: ARGENTINA ECONOMY/BUDGET
(For help: Click 'Contact Us' in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546)
COPYRIGHT
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The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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)
COPYRIGHT
Copyright Thomson Reuters 2011. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
WASHINGTON, Aug 29 (Reuters) - U.S. consumer spending rose at its fastest pace in five months in July, supporting views the economy was not falling back into recession.
The Commerce Department said on Monday consumer spending increased 0.8 percent on strong demand for motor vehicles, after slipping 0.1 percent in June.
Economists had expected spending, which accounts for about 70 percent of U.S. economic activity, to rise 0.5 percent.
When adjusted for inflation, spending rose 0.5 percent last month, the largest gain since a matching increase in December 2009, after being flat in June.
The data was the latest to suggest the economy started the third quarter with some strength after growth almost stalled in the first half of the year.
It also offered hope that output would continue to expand, though at a moderate pace. However, the risks of a new recession have risen following a sharp drop in stock prices and the erosion of consumer sentiment.
'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,' said Jeffrey Greenberg, an economist at Nomura Securities in New York. 'It seems at least through July, the economy was not too poor.'
U.S. stock index futures held onto earlier gains after the data, while U.S. Treasuries prices added to losses. The dollar held steady versus the euro and maintained slight gains versus the yen.
Industrial production, retail sales and employment data have so far been consistent with a slow economic growth scenario rather than an outright contraction in output.
Consumer spending braked sharply to a 0.4 percent annual pace in the second quarter after advancing 2.1 percent in the first three months of the year.
The overall economy grew at a 1 percent pace in the second quarter after expanding only 0.4 percent in the prior quarter.
Real spending on durable goods increased 2 percent last month, likely reflecting a pick-up in motor vehicle sales as the shortage of autos caused by the supply disruptions from Japan eased.
Overall spending in July was lifted by a 0.3 percent rise in income as employers stepped-up hiring. Income rose 0.2 percent in June and economists had expected a 0.3 percent increase last month.
Disposable income increased 0.3 percent, but when adjusted for inflation fell 0.1 percent -- the first decline since September.
With spending outstripping real disposable income, savings fell to an annual rate of $582.8 billion from $638.6 billion in June.
The report also showed inflation pressures remain elevated. The personal consumption expenditures price index, or PCE, rose 0.4 percent after slipping 0.1 percent in June.
Compared to July last year, the index was up 2.8 percent, the largest increase since October 2008, after advancing 2.6 percent in June.
The core PCE index -- excluding food and energy - rose 0.2 percent for the second straight month.
The core index, which is closely watched by Federal Reserve officials, increased 1.6 percent in the 12 months through July, the largest increase since May 2010, after rising 1.4 percent in June. The Fed would like to see it close to 2 percent.
(Reporting by Lucia Mutikani; Editing by Neil Stempleman) Keywords: USA ECONOMY/
(lucia.mutikani@thomsonreuters.com; Tel: 202 898 8315; Reuters messaging: lucia.mutikani.thomsonreuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2011. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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:
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)
COPYRIGHT
Copyright Thomson Reuters 2011. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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:
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)
COPYRIGHT
Copyright Thomson Reuters 2011. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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:
DAVID ADER, HEAD OF GOVERNMENT BOND STRATEGY, CRT CAPITAL
GROUP, STAMFORD, CONNECTICUT
'The headlines were a tad better than expected on the
spending side, with that a function of a decrease in savings.
The income figures were less impressive though with real
disposable income slipping 0.1 percent and real incomes flat
after transfer payments raising for us the question of where
further consumption gains come from if not better incomes. The
(Treasuries) market is little changed to a tad lower as you
move out the curve.'
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)
COPYRIGHT
Copyright Thomson Reuters 2011. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
