Consumer Spending in U.S. Probably Rose by Most in Five Months

Photographer: Peter Foley/Bloomberg

Women's jeans hang on display at The Gap Inc's new Piperlime store in the Soho neighborhood of New York, on Aug. 29, 2012. Close

Women's jeans hang on display at The Gap Inc's new Piperlime store in the Soho... Read More

Close
Open
Photographer: Peter Foley/Bloomberg

Women's jeans hang on display at The Gap Inc's new Piperlime store in the Soho neighborhood of New York, on Aug. 29, 2012.

Consumer spending in the U.S. probably climbed in July by the most in five months, economists said before a report today.

Household purchases, which account for about 70 percent of the economy, rose 0.5 percent last month after being little changed in June, according to the median estimate of 76 economists surveyed by Bloomberg.

Rising purchases suggest consumers bounced back last month after scrimping in June and May, which may set the stage for faster third-quarter economic growth. Even so, costlier gasoline and a jobless rate that has exceeded 8 percent since early 2009 threaten to limit spending gains in the second half of 2012.

“Households spent a little bit more in July, which is encouraging given that over the previous few months spending pretty much stagnated,” said Paul Dales, senior U.S. economist at Capital Economics Ltd. in London. “If we jump forward, I get a bit worried again. I don’t really expect there to be big improvements in household spending in the next few months.”

The Commerce Department will release the spending report at 8:30 a.m. in Washington. Economists’ forecasts ranged from gains of 0.2 percent to 0.7 percent. Spending fell 0.1 percent in May.

The report may also show incomes grew 0.3 percent after increasing 0.5 percent in June, according to the survey median.

An early indicator of consumer purchases, retail sales rose 0.8 percent in July, the most in five months, Commerce Department data showed Aug. 14. Receipts climbed in all 13 sales categories, the first time that’s happened since 2005.

‘Quite Good’

“The back-to-school business has been really quite good,” Ed Stack, chairman and chief executive officer of Dick’s Sporting Goods Inc. (DKS), said during an Aug. 14 earnings call. The Coraopolis, Pennsylvania-based retailer this month boosted its forecast for full-year earnings. “We’ve been very pleased with our business,” he said.

Retail shares have outperformed the broader market this year. The Standard & Poor’s 500 Supercomposite Retailing Index has climbed 24 percent since Dec. 30, compared with a 12 percent gain in the broader S&P 500.

A pickup in employment growth shored up household purchasing power last month. Payrolls rose by 163,000 workers in July, the most since February, according to Labor Department data. At the same time, the jobless rate rose to 8.3 percent, the highest level in five months.

Sustained consumer demand would boost the pace of economic expansion in the U.S. Americans’ purchases increased at a 1.7 percent annual rate in the second quarter, the smallest advance in a year.

Spending Forecast

Economists project consumer spending will increase at a 2 percent rate in the third quarter, according to the median forecast of 78 economists surveyed from Aug. 3 to Aug. 8.

Faster economic growth driven by household spending will probably hinge on bigger job gains. Measures of sentiment, nonetheless, indicate employment prospects are not picking up. The Conference Board’s index of consumer confidence fell in August by the most in 10 months, and the Bloomberg Consumer Comfort Index dropped in the week ended Aug. 19 to the lowest level since January.

Gasoline prices present an additional obstacle. The average price of a gallon of regular gasoline climbed 28 cents since July 30 to reach $3.80 on Aug. 28, according to AAA, the nation’s largest auto club. Prices at the pump will be the highest ever for the U.S. Labor Day holiday, AAA forecast.

                        Bloomberg Survey ================================================================                               Pers     Pers Core PCE  Initial                                Inc    Spend   Prices   Claims                               MOM%     MOM%     MOM%   ,000’s ================================================================ Date of Release              08/30    08/30    08/30    08/30 Observation Period            July     July     July   25-Aug ---------------------------------------------------------------- Median                        0.3%     0.5%     0.1%      370 Average                       0.3%     0.5%     0.1%      371 High Forecast                 0.6%     0.7%     0.2%      380 Low Forecast                  0.1%     0.2%     0.0%      363 Number of Participants          73       76       47       50 Previous                      0.5%     0.0%     0.2%      372 ---------------------------------------------------------------- 4CAST                         0.3%     0.4%     0.1%      367 ABN Amro                      0.3%     ---      ---       365 Action Economics              0.3%     0.5%     0.1%      371 Ameriprise Financial          0.3%     0.5%     0.1%      370 Bank of the West              0.3%     0.5%     0.1%      368 Bank of Tokyo-Mitsubishi      0.3%     0.6%     ---       375 Barclays                      0.4%     0.4%     0.1%      370 Bayerische Landesbank         0.4%     0.4%     ---      --- BBVA                          0.2%     0.4%     ---       367 BMO Capital Markets           0.4%     0.4%     0.1%      370 BNP Paribas                   0.3%     0.4%     ---       368 BofA Merrill Lynch            0.3%     0.5%     ---       375 Briefing.com                  0.2%     0.5%     0.1%      370 Capital Economics             0.3%     0.4%     0.1%     --- CIBC World Markets            0.3%     0.6%     ---      --- Citi                          0.3%     0.5%     0.1%      370 ClearView Economics           0.3%     0.5%     0.2%     --- Comerica                      0.2%     0.2%     ---      --- Commerzbank AG                0.6%     0.4%     0.1%      370 Credit Agricole CIB           0.3%     0.4%     0.1%     --- Credit Suisse                 0.2%     0.5%     0.1%      365 Danske Bank                   0.2%     0.5%     0.1%     --- DekaBank                      0.3%     0.4%     0.1%     --- Desjardins Group              0.4%     0.5%     0.1%      370 Deutsche Bank Securities      0.4%     0.4%     0.2%      370 Deutsche Postbank AG          ---      0.5%     ---      --- DZ Bank                       0.2%     0.4%     ---      --- Exane                         ---      0.5%     ---      --- First Trust Advisors          0.3%     0.5%     ---       369 FTN Financial                 0.3%     0.4%     0.1%     --- Goldman, Sachs & Co.          0.5%     0.4%     0.2%     --- Helaba                        0.3%     0.5%     0.2%      370 High Frequency Economics      0.3%     0.5%     0.1%      370 Horizon Investments           0.1%     0.3%     0.0%     --- Hugh Johnson Advisors         0.3%     0.4%     ---       370 IDEAglobal                    0.3%     0.4%     0.1%      365 IHS Global Insight            0.3%     0.5%     0.1%      370 Informa Global Markets        0.2%     0.4%     ---       375 ING Financial Markets         0.2%     0.5%     0.1%      365 Insight Economics             0.3%     0.4%     0.1%      365 Intesa Sanpaulo               0.3%     0.4%     0.2%     --- J.P. Morgan Chase             0.3%     0.4%     0.0%      370 Janney Montgomery Scott       0.2%     0.5%     0.1%     --- Jefferies & Co.               0.3%     0.4%     ---       380 John Hancock Financial        ---      ---      ---       364 Landesbank Berlin             0.3%     0.5%     ---       365 Landesbank BW                 0.3%     0.5%     ---      --- Lloyds Bank                   0.3%     0.5%     ---       375 Maria Fiorini Ramirez         0.3%     0.5%     0.1%      370 Market Securities             ---      0.5%     ---      --- Mizuho Securities             0.2%     ---      ---       375 Moody’s Analytics             0.3%     0.6%     0.2%      372 Morgan Stanley & Co.          0.3%     0.5%     ---       375 National Bank Financial       0.3%     0.5%     ---      --- Natixis                       ---      0.5%     ---      --- Newedge                       0.3%     0.5%     ---      --- Nomura Securities             0.4%     0.6%     0.2%     --- Nord/LB                       0.3%     0.4%     ---       370 OSK Group/DMG                 0.3%     0.4%     0.1%     --- Pierpont Securities           0.3%     0.4%     0.1%      372 PineBridge Investments        0.2%     0.5%     ---       368 PNC Bank                      0.3%     0.4%     ---      --- Raiffeisenbank International  0.3%     0.4%     0.1%     --- Raymond James                 0.3%     0.5%     0.1%      370 RBC Capital Markets           0.3%     0.5%     ---       380 RBS Securities                0.3%     0.3%     0.1%      380 Regions Financial             0.3%     0.5%     ---      --- Renaissance Macro Research    0.3%     0.6%     0.1%     --- Scotiabank                    0.1%     0.7%     0.1%      370 SMBC Nikko Securities         0.3%     0.5%     0.1%     --- Societe Generale              0.3%     0.3%     0.1%      377 Southern Polytechnic State    ---      ---      ---       363 Standard Chartered            0.3%     0.4%     ---       366 Stone & McCarthy              0.2%     0.4%     ---       375 TD Securities                 0.4%     0.4%     0.1%      375 UBS                           0.3%     0.4%     0.1%      375 University of Maryland        0.3%     0.3%     0.1%     --- Wells Fargo & Co.             0.4%     0.4%     0.1%     --- WestLB AG                     0.2%     0.5%     0.1%      375 Wrightson ICAP                ---      0.4%     0.1%      370 ================================================================ 

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.