Financial and Economic Brief - October 3, 2017by © Liberty Publishing, Inc.
Consumer Spending Flat in August
According to the U.S. Commerce Department, consumer spending only rose 0.1% in August as Hurricane Harvey “weighed on” auto sales and unseasonably mild temperature reduced demand for utilities. It was also reported that annual inflation increased at its slowest pace since late 2015, indicating a moderation in economic growth in the third quarter. August’s slight gain in consumer spending was in line with economists’ expectations. The U.S. central bank suggested last week it anticipated one more interest rate hike by the end of the year.
Dow Soars for 8 Quarters
The Dow climbed 5% during the third quarter, which stretched its streak to eight winning quarters. The current streak began during the last three months of 2015 and picked up pace after the election in November. Stocks have continued climbing because the economic strength in the U.S. and overseas has kept corporate profits growing. “The market is primarily up because earnings have been good. The tax reform proposal has been icing on the cake-but that's not the ultimate reason,” said JJ Kinahan, chief market strategist at TD Ameritrade. Investors are hoping third-quarter results will continue to show healthy profits.
Construction Spending Increased in August
The Commerce Department reported that U.S. construction spending increased in August by 0.5% after two months of declines, helped by strength in home building, nonresidential construction and state and local government construction. Nevertheless, the August increase was not enough to recover the losses of the past two months, leaving spending 1.5% below the May level. Housing construction was up 0.4%. Nonresidential activity increased 0.5%, reflecting strength in hotel and office building. The August rebound was also helped by a gain in spending by state and local governments, which helped offset a further drop at the Federal level.