US consumer spending picks up speed in August

US economic recovery is continued to be driven by US consumer spending. Financial volatility picked up in August, but this appears to have done little to dent consumer sentiment and spending. The gains in August were broad-based across spending categories. For the quarter, real PCE is on track to grow by 3.3% (annualized).

The decline in energy prices continues to deliver strong gains in purchasing power, real disposable income has risen by 3.7% (annualized) over the three months ending in August, and with the saving rate holding relatively steady, this is translating into robust spending.

"This report provides further evidence that domestic spending momentum has continued into the third quarter, supporting the view that the American economy is able to navigate global headwinds and will continue to deliver above-trend economic growth", states TD Economics. 

While inflation remains well under target, today's report offers some evidence that it will gradually move up towards 2.0% - precisely what the Fed is looking for in order to begin the normalization process.