American consumers bought more goods and services in the second quarter of 2016, according to a report on Tuesday (Aug. 2) from Reuters.
The numbers seem to show the strength of the U.S. retail industry, with consumer spending rising 0.4 percent in June after a 0.3 percent increase in May and a 1 percent increase in April.
The June data came from a gross domestic product report for the U.S. economy for the second quarter of 2016 that also showed that consumer spending has risen at a 4.2 percent annual rate, which is the fastest rate of increase in about two years, according to Reuters.
U.S. News & World Report attributed the rise to a “surge” in spending on nondurable goods, while spending on automobiles dropped off.
Despite all this growth, personal income only grew by 0.2 percent in June, which matched May’s total and still appears to be making some economists and analysts wary about the U.S.’s future economic outlook.
Analysts are forecasting that “solid gains” in hiring will propel consumer spending and lead to future growth through the end of the year, according to U.S. News & World Report. Consumer spending accounts for about 70 percent of all economic growth.
After inflation, the economy expanded at a 1.2 percent annual rate, which is lower than most economists would like to see, but analysts are forecasting that rate to about double in the second half of 2016 due to more favorable economic factors.
Still, the specter of another rate hike by the Federal Reserve continues to be a potential drag on the economy. Although the Fed opted not to raise interest rates when it met last week, it did offer a positive assessment of the economy, leaving many to believe that another rate hike could be on the table when the Fed meets again come September.