U.S. Consumer Spending Up 0.6%

Incomes rise 0.3%

As Americans shrugged off credit and housing market turmoil, U.S. consumer spending rose 0.6% in August, government data showed Sept. 28. Personal income however rose a more modest 0.3%, slightly below expectations of a 0.4% gain.

A key inflation gauge in the report known as the personal consumption expenditures price index fell 0.1% in August, and shows a 1.8% rise over the past 12 months. Core inflation, which excludes volatile food and energy costs, rose 0.1% in August and 1.8% in the past year.

Real disposable incomes, which are inflation-adjusted and measure income after taxes, rose 0.4% in August after rising 0.5% in July.

Analysts said the report should come as a comfort to the Federal Reserve because it indicates inflation is in check. "This was a good report as household spending stayed up while inflation came down," said Joel Naroff of Naroff Economic Advisors. "The markets should love this number and even some of the Fed members may crack a smile. But this report straddles the credit crunch shock and while it does indicate consumers have not pulled back, the monetary authorities will want to see data from after August."

Copyright Agence France-Presse, 2007

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