Real Consumer Spending Increases in August to 27-Month High, Almost Back to Pre-Recession Level
According to today's report from the BEA on "Personal Income and Outlays," real personal consumption expenditures reached a 27-month high of $9,321.2 billion in August, the highest level of consumer spending since May of 2008 (see chart above). Real consumer spending in August was just $34.3 billion (or 0.37%) below the peak of $9,355.5 billion reached in December 2007, the month the U.S. economy went into recession.
In the 16-month period between January 2008 and April 2009, real personal consumption fell in 13 of those months; in the 16-month period from May 2009 to August 2010, consumer spending has increased in 13 months, as the economy has gradually recovered. Over the last seven months, consumer spending has increased in every month except April. The August increase in real spending was the fourth straight monthly increase and beat the expectations of economists.
This rebound in consumer spending over the summer is consistent with the widespread increases in August state tax revenues (which includes sales taxes) that were higher than expected in many states, see CD post here with 13 states reporting increases in August tax revenues.