What's going on?

A bunch of US economic data was released on Friday. The gist of it: people didn�t spend any more in August than they did in July and inflation (a.k.a. the rate of price increases) remained fairly tepid.

What does this mean?

US economic growth, especially in the past year, has been built largely on personal spending by Americans � so a lot of attention is paid to changes in these metrics. After a relatively strong few months of consumer spending growth, American spending flat-lined in August. That�s not necessarily a big problem, but it�s a bit of softness that economists will be keeping a close eye on.

Why should I care?

The bigger picture: Jobs power consumer spending � and job growth appears to be fairly solid.
It�s pretty logical: the more people who are employed, the more money is spent on both everyday items and on fun stuff, like dining out on weekends. America has experienced a prolonged period of job growth (essentially since the 2008/9 financial crash). In the past year or so, this has led to wage growth hitting its highest level since the financial crash. We�ll know more on Friday when September employment data is released, but so long as the jobs environment remains fairly good, consumer spending in the US should also hold up.


For you personally: Inflation is creeping higher.
Within the new data was the US Federal Reserve�s preferred measure of inflation. Its �core� reading (which excludes volatile fuel and food prices and is considered to be a good measure of the underlying, real rate of inflation) rose 1.7% versus the year earlier – which is the highest reading since February. It could be a sign that inflation is moving sustainably higher, which means slightly larger price increases could be the norm moving forward.