Consumer Spending Is Flat; Jobless Claims Up

From Associated Press

Consumers were tightfisted with their money amid high costs in August and hurricane-related disruptions last week sent applications for jobless benefits to their highest level in seven months.

Overall spending was flat in August, the Commerce Department reported Thursday. But July’s increase in consumer spending was 1.1%, higher than the 0.8% initially reported, as consumers overcame their worries about energy costs and a sluggish jobs market.

Americans’ income, the fuel for future economic growth, increased by 0.4% in August after a 0.2% rise the previous month. August’s showing was the highest since May, which recorded a 0.5% increase.


In a separate report, the number of U.S. workers filing first-time applications for unemployment benefits rose by 18,000 to a seasonally adjusted 369,000 for the week that ended Saturday, the Labor Department reported. That marked the highest level since the week of Feb. 7.

A Labor Department statistician said the increase was caused by hurricanes Charley, Frances and Ivan. Jobless claims have risen in five of the six weeks since the hurricanes began to strike Florida in mid-August. The more stable four-week average of claims has moved steadily higher. Last week it stood at 343,500 -- a two-month high.

Consumer spending on durable goods, such as cars, fell by 1.6% in August after soaring by 6.2% in July. Spending on nondurables, such as food, rose by 0.2% after a 0.3% rise in July.

High energy prices, violence in Iraq, concerns about terrorism, a sluggish jobs market and the election “have become a wedge between consumer spending and healthy economic fundamentals,” said Sung Won Sohn, an economist at Wells Fargo & Co.