American consumer spending rose 1.3% in August, the biggest rise since June 2005, triggered by back-to-school spending and the government car-rebate program. Income gains were a just 0.2%.The savings rate fell. Separately, initial weekly claims for jobless benefits rose 17,000 to 551,000 last week. Continuing claims -- those covering workers for more than one week -- fell by 70,000 to 6.1 million in the week ended Sept. 19th.

Consumer spending

Personal income increased 0.25 in August, after increasing by the same amount in July, according to the Bureau of Economic Analysis. Wages and salaries, the largest component of personal income, increased 0.2% in August and in July. Wages in services industries picked up.

Real disposable personal income (DPI), income adjusted for inflation and taxes, fell 0.2% in August, reflecting a rise in PCE (personal expenditure expenditure) prices.

Real consumer spending (spending adjusted for price changes) increased 0.9% in August, the largest increase since June 2005. New car and truck purchases were the leading contributor, reflecting the effects of the federal CARS (“cash for clunkers”) program.

PCE prices increased 0.3% in August. Excluding food and energy, prices rose 0.1%.

Personal saving as a percent of disposable income was 3.0% in August down from 4% in July and a 12-month average of 3.9%.

JOBLESS CLAIMS

The US Department of Labor said today that initial claims for jobless benefits rose 17,000 to 551,000 in the week ended Sept. 26th.

The previous week's total was revised from 530,000 to 534,000.

The four-week moving average of new claims, which aims to smooth volatility in the data, fell by 6,250 to 548,000 from the previous week's revised figure of 554,250.

Continuing claims fell by 70,000 to 6,090,000 from the preceding week's revised level of 6,160,000.