U.S. Consumer Spending Steady Amid Economic Growth

In August, U.S. consumer spending rose slightly less than anticipated, but the economy still displays robust growth. Despite a slight drop in the goods trade deficit, solid wage increases and elevated savings support continued consumer spending, reducing the likelihood of major interest rate cuts by the Federal Reserve.

In August, U.S. consumer spending rose just under expectations, but the economy continues to showcase strong growth. On Friday, the Commerce Department revealed a significant narrowing of the goods trade deficit, the largest in nearly two years, suggesting trade might only mildly drag down the GDP, which will likely be offset by inventory increases.

Economists believe the data isn't weak enough to push the Federal Reserve into a 50 basis points interest rate cut in November, though strong wage gains and a high saving rate are expected to sustain consumer spending in the near future. Next week's employment report may shed more light on the potential for future borrowing cost reductions.

Michael Pearce, deputy chief U.S. economist at Oxford Economics, highlighted the resilient consumer spending and solid economic foundations, expressing confidence in a positive short-term economic outlook. Pearce noted that these factors might slow the pace of rate cuts by the Fed next year. The Commerce Department's Bureau of Economic Analysis reported a 0.2% rise in consumer spending in August, following a 0.5% gain in July.

(With inputs from agencies.)