Date: August 30, 2019
U.S. Personal Spending Increased More Than Forecast in July
“U.S. personal spending accelerated in July, exceeding forecasts and indicating household consumption remained solid at the start of the third quarter and will continue as the economy’s dominant growth engine. Consumer outlays for goods and services, which account for about 70% of gross domestic product, increased 0.6% during the month after a 0.3% June advance, Commerce Department data showed Friday. The report also showed incomes rose less than forecast, while the Federal Reserve’s preferred inflation gauge remained range bound. The data indicate Americans are showing scant signs of reining in their spending despite recent concerns about the prospects of cooler economic growth. A report yesterday showed consumption rambled ahead in the second quarter at the fastest pace since the end of 2014. The report’s inflation figures show prices pressures continue to fall short of the Fed’s goal and, in conjunction with the risks to the economy from stumbling overseas economies and an escalation of the U.S.-China trade war, give policy makers reason to keep reducing interest rates. The broader personal consumption expenditures price gauge rose 0.2% from the prior month and was up 1.4% from a year earlier, matching the median estimates in a Bloomberg survey. The Fed officially targets 2% inflation. The core PCE price index, which excludes food and energy, increased 1.6% from July of last year, also matching estimates. Policy makers view the core gauge as a better indicator of underlying price trends and have said they’re also aiming for it to rise 2%. After adjusting for the increase in inflation, spending rose 0.4%. The July gain was driven by a 0.8% increase in outlays for merchandise, the largest advance in four months, according to the report. Spending on services also picked up. The Commerce Department’s report showed incomes were restrained in July by a 1.8% decline in personal interest income, although wages and salaries settled back as well. Worker pay increased 0.2% after a 0.5% advance a month earlier.”
Boris Johnson’s Plan to Suspend Parliament Survives Early Court Test
“A Scottish judge refused to block Boris Johnson’s plan to suspend Parliament, dealing a blow to lawmakers who argued that there isn’t enough time to thwart a no-deal Brexit. Judge Raymond Doherty in Edinburgh held off granting an emergency injunction against the prime minister’s plan, saying that there is time to hold more hearings on the issue next week. A Belfast court on Friday also put off a decision on whether to issue an injunction, giving more time for the situation in Westminster to develop before addressing the question. Johnson’s decision to suspend Parliament in the run up to the Oct. 31 Brexit deadline has unleashed a wave of opposition from lawmakers who say the move will make a no-deal split from the European Union more likely. The decisions to push the hearings into next week set up what could be the “most important week in modern British history,” Ian Murray, one of the lawmakers involved in the Scottish case, said in a statement. Ruling on the Scottish challenge, brought by more than 70 lawmakers, Doherty said that while he isn’t satisfied there’s a “cogent need” for an interim injunction against Parliament’s suspension, it’s “in the interest of justice that this proceeds sooner rather than later.” A full hearing in the case was moved up to Sept. 3. Meanwhile, a third legal challenge to Parliament’s suspension, by the businesswoman Gina Miller and the former Prime Minister John Major, is due to get an initial review on Sept. 5.”
New Tariffs to Test the Strength of U.S. Consumers
“ Sausages, ketchup and mustard, plastic plates — all essential ingredients for Americans tending to their grills this Labor Day weekend. Soon they’ll be 15% more expensive to import from China. The picnic products are just a sampling of the more than 3,200 categories of Chinese goods targeted for the new tariff starting Sunday, barring a last-minute flinch by President Donald Trump. It’s the next escalation of a trade war between Washington and Beijing that will add import taxes on about $112 billion in Chinese imports, including many consumer food items, household goods and apparel. It’ll also be a good stress test of the strongest pillar of the U.S. economy at the moment: consumers. In the days leading up to the next wave of U.S. levies, China is calling for calm and more talks.”
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