A woman carries an Ann Taylor Loft shopping bag in the Georgetown neighborhood of Washington, D.C.
The numbers: Consumer spending moderated in August after five straight strong gains. Consumer spending rose 0.3%, the slowest pace since February, the government said Friday. Economists surveyed by MarketWatch had predicted a 0.4% increase.
The 12-month increase in the PCE index, the Federal Reserve’s preferred inflation gauge, fell to 2.2% from 2.3%. The yearly increase in the core PCE rate that strips out food and energy was steady at 2%.
What happened: Outlays on durable goods such as new cars fell 0.1%, while spending on services increased 0.3%, and purchases of “nondurable” goods such as gas rose 0.5%.
Meanwhile, personal income also rose 0.3% last month. Economists had forecast a 0.4% rise. Wages rose 0.5% in August, the fastest pace since January.
The savings rate held steady at 6.6%. The savings rate had been as high as 7.4% earlier this year.
Big picture: Economists expect consumer spending to moderate a bit in the third quarter on the heels of a 3.8% gain in the second quarter.
Still, consumer spending is expected to remain strong as confidence hit high levels, taxes are low and income is rising. Americans are more confident about the economy than they have been in 18 years, according to one survey.
In addition, Fed Chairman Jerome Powell said Wednesday that household balance sheets are in good shape.
Market reaction: Stock futures were lower Friday, putting the Dow Jones Industrial Average DJIA, -0.13% on course for its worst week in three months.