WASHINGTON - U.S. consumer spending surged in August, but outlays adjusted for inflation were weaker than initially thought in the prior month, reinforcing expectations that economic growth slowed in the third quarter as COVID-19 infections flared up.
The report from the Commerce Department, which showed inflation remaining hot in August, raised the risk of consumer spending stalling in the third quarter, even if spending accelerates further in September. Inflation-adjusted, or the so-called real consumer spending is what goes into the calculation of gross domestic product.
Goods spending fell 2.1% in July. Spending on services rose 0.6% in August, supported by housing, utilities and health care. Services, which account for the bulk of consumer spending, increased 1.1% in July. Spending is shifting back to services from goods, but the resurgence in coronavirus cases, driven by the Delta variant, crimped demand for air travel, hotel accommodation and sales at restaurants and bars. A survey from the Institute for Supply Management on Friday showed manufacturers experienced longer delays getting raw materials delivered to factories and paid higher prices for inputs in September.
Stocks on Wall Street were higher. The dollar fell against a basket of currencies. U.S. Treasury prices were mixed.
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