Robust Consumer Spending Points to Economic Resilience Amid Rate Cut Debates

U.S. consumer spending showed a solid increase of 0.5% in July, indicating a firm economy and reducing the likelihood of a half-percentage-point interest rate cut by the Federal Reserve next month. The labor market slowdown and steady wage growth continue to support spending, despite a rise in the unemployment rate.

U.S. consumer spending surged by 0.5% in July, as per data from the Commerce Department, suggesting a resilient economy that may not warrant a significant rate cut from the Federal Reserve next month.

The report highlights moderate inflation and a slight increase in unemployment to 4.3%, fueling discussions among economists about potential rate adjustments by the Fed in September.

Notably, consumer expenditures spanned across various sectors like motor vehicles, housing, healthcare, and recreational goods, bolstered by steady wage growth and reduced personal savings.

(With inputs from agencies.)