U.S. consumers increased their spending in July by the largest amount in 6 months and the back-to-school shopping season got off to a strong start in August, according to an AP report.
The U.S. Commerce Department reported that July consumer spending rose by 0.8 percent, double the 0.4-percent gain in June, reflecting a rebound in auto sales.
Meanwhile, many of the U.S.'s retailers reported solid gains for back-to-school shopping in August, led by better-than-expected increases at retailing giant Wal-Mart Stores Inc. and many teen retailers such as Abercrombie and Fitch Co. and Wet Seal Inc.
The new reports provided evidence that consumers are continuing to spend despite rising interest rates, a cooling housing market and gasoline prices that hit records this summer above U.S. $3 per gallon.
That is good news for the economy, given that consumer spending accounts for two-thirds of total economic growth. A slowdown in consumer spending in the spring contributed to a sharp drop in overall economic activity and raised worries that further consumer cutbacks could short-circuit the economic expansion.
Some analysts say overall economic growth in the second half of this year may come in at a stronger pace than expected, based on the rebound in consumer spending. But they said it was critical that consumer confidence stabilize in coming months.
to Daily News