Consumers Are Spending, but Not Enough

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By Trey Thoelcke Updated Published
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Consumers boosted their spending in July by a seasonally adjusted 0.4%, according to the latest Commerce Department data. That was the biggest gain in five months, as aftertax incomes continued to grow modestly. The increased spending was in line with consensus expectations.

Personal income rose 0.3% for the third-straight month, and aftertax income increased by the same amount in July. The U.S. savings rate fell to 4.2% in July from the previous month, the highest rate in a year.

Consumer spending is the largest single source of growth in the U.S. economy. The high unemployment rate and the weaker global economy are among the factors holding consumers back. The Conference Board’s consumer-confidence index, released earlier this week, fell sharply in August to its lowest level in nine months, lending support to the notion that Americans are more anxious.

But, as we noted this morning, retailers that reported August same-store sales today mostly indicated growth in their sales. Target Corp. (NYSE: TGT) said same-store sales rose 4.2% year-over-year. Gap Inc. (NYSE: GPS) reported same-store sales were 9% higher, and Costco Wholesale Corp. (NASDAQ: COST) said its same-store sales climbed 6%.

Treasury prices rose this morning after the release of this data and a report indicated U.S. first-time jobless claims were unchanged at 374,000 last week. The dollar fell against the euro, though traders are also awaiting a Friday speech from Federal Reserve Chairman Ben Bernanke.

Photo of Trey Thoelcke
About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.

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