US Consumer Spending Fell in July

U.S. consumer spending unexpectedly fell in July as savings rose to their highest level in more than 1-1/2 years, indicating that households remain cautious despite an acceleration in economic growth.

The Commerce Department said on Friday consumer spending dipped 0.1 percent last month, the first decline since January, after an unrevised 0.4 percent gain in June.

Economists had expected consumer spending, which accounts for more than two-thirds of U.S. economic activity, to increase 0.2 percent in July. When adjusted for inflation, it slipped 0.2 percent after gaining 0.2 percent in June.

 
The weakness in consumer spending at the start of the third quarter will probably do little to change perceptions that the economy has retained much of its second-quarter momentum.

Other sectors of the economy such as housing, business spending, exports and government activity are accelerating. In addition, labor market conditions are strengthening.

The dollar fell against a basket of currencies after the data. U.S. stock index futures were trading higher.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza