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Consumer Spending

Gallup US Consumer Spending Measure

Americans’ daily self-reported spending averaged $109 in July, the sixth consecutive month where the average was $100 or more. July’s report of $109 is the highest spending average since May 2008. The $6 increase from June is not statistically significant. It is, however, the highest for the month of July for this index. Spending among both higher and lower earning Americans was slightly up in July and is among the highest of the recent upward trend. Higher earners’ spending has consistently been more than double that of lower earners. Adults in households whose annual income is $90,000 or more reported spending an average of $178 throughout July. At the same time, spending with households less than $90,000 annually, averaged $80. This is a strong start for the second half of 2017, but given Augusts’ history spending is likely to remain flat or lower, Americans’ relatively high spending average in July Is not likely to hold.

Consumer Price Index

Consumer prices remains very soft, failing to match economists’ expectations’ for July. Total prices edged one tenth higher in July as did the core which does not include food and energy, both of these factors are no better than what economists’ predicted as their low estimates.  Yearly rates are also at the low estimates at 1.7 percent for both. Moderation in housing costs remains a major disinflationary force, inching only 0.1 percent higher for a yearly 2.8 percent which is down 2 tenths from June. Wireless services continue to move lower falling 0.3 percent on the month for a yearly decline of 13.3 percent. Vehicle sales have been weak this ye4ar and is being reflected in prices which fell 0.5 percent in the month. Lodging away from home is another major negative in the July report, falling from a record 4.2 percent as motels and hotels cut prices. On the plus side, apparel prices which have been on a long negative streak recently, rose 0.3 percent, however the yearly rate remains in the negatives at minus 0.4 percent. Medical care rose 0.4 percent for the second straight month, yearly rates, however, edged lower to 2.6 percent. Energy prices at minus 0.1 percent were a negative in the report, but were offset by a 0.2 percent rise in food. Lack of inflation remains the central trouble in the Federal Reserve’s policy efforts. Today’s report and results will not be improving expectations for the beginning of balance sheet unwinding at the September FOMC.

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