Consumer spending rose in July at the strongest pace in four months as incomes rose slightly. But will it be enough to sustain an economic recovery?
Sure, the 0.4% increase in spending reported by the Commerce Department on Monday is a relief after being hit with a bunch of weak data for July. But we're still in some danger of a double-dip recession, albeit not as much as previously thought.
"We are still of the opinion that there is a 30% chance of a double-dip (recession) but it's definitely not our baseline forecast," said Scott Hoyt, director of consumer economics at Moody's Economy.com, according to Reuters. "When consumer spending is growing it's hard to get a double dip."
The increase in spending was slightly above estimates of a 0.3% rise. July incomes were up 0.2%. The government on Friday lowered its estimate of second-quarter growth to a 1.6% annual rate from 2.4%, although the figure on consumer spending was revised higher.
The non-farm payroll report for August is due on Friday.
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