Americans spend more on health care, less on gas, PCE shows

• August 1, 2017
• realestatelife
• Business & Markets, Real Estate Finance

Americans increased spending in June by the smallest amount in five months, partly because it cost less to fill up at the gas pump.
Consumer spending rose 0.1% in June, matching the smallest increase of 2017. Income growth and inflation, meanwhile, were unchanged. Despite a stable economy and the best labor market in years, Americans remain cautious spenders. Still, they are spending more than enough to sustain an economy now in its ninth year of expansion and encourage businesses to hire more workers.
Households spent more on health care in June, but they saved on gasoline because of cheaper prices at the pump.
Lower inflation is giving Americans some extra cushion.
The PCE index, the Federal Reserve’s preferred inflation gauge, was flat in June. What’s more, the 12-month rate of inflation stood at 1.4%, down from 2.2% earlier in the year.
Inflation had surged in 2016 and early 2017 to an eight-and-a-half year before leveling off. Slower inflation has prompted the Federal Reserve to reconsider when it next raises interest rates.
Most analysts believe the central bank will wait until December.