Consumer spending on goods and services, which accounts for about two-thirds of gross domestic product, increased by just 0.1% in August from July, the smallest gain in six months, according to the Commerce Department today. Personal income was up 0.4% in August. Which makes the lag in consumer spending a little worrying since it suggests that consumer’s may be reining in spending because their view of the economy has soured slightly.
The Commerce Department also reported that bookings for non-military capital goods excluding aircraft–in other words business investment — fell 0.2%. That was the weakest performance in four months. Economists surveyed by Bloomberg had expected no change. Durable goods orders as a whole rose 0.2% in August. Economists surveyed by Briefing.com had expected a drop of 1.0%.
All this suggests that third quarter GDP growth will be solid if perhaps not as robust as Wall Street economists had projected just a few weeks ago when retail sales surprised to the upside.