Consumer spending at U.S. retailers barely increased during the month of August, hinting to a possible slowing of spending and growth for the economy. The Commerce Department said Friday that August retail sales increased just 0.2 percent from the month of July.
After evaluating the slow economic growth during the July-September quarter, many analysts conclude that consumers are becoming more wary of frivolous spending. “Consumer spending is in middle gear in the summer,” Sal Guatieri, an economist at BMO Capital Markets, told the Associated Press. Slow wage growth, modest job gains and higher taxes might also contribute to growing reluctance by consumers to open their wallets.
Mr. Guatieri predicts that retail spending will grow at roughly the same rate throughout the July-September quarter as it did in the previous quarter. This would mean that overall economic growth is declining from the estimated annual rate of 2.5 percent to an annual rate of 2 percent.
Consumer spending accounts for 70 percent of economic activity.
Still, many economists believe the retail sales are steady enough for the Federal Reserve to begin easing its stimulus program for the economy when it meets to consider interest rates later this month.