US consumer spending figures discourage large Fed rate cut

US personal consumption expenditures (PCE) increased by $103.8 billion (0.5 per cent), challenging the notion of a half-percentage-point interest rate cut by the Federal Reserve in the upcoming month.

According to estimates released on Friday by the U.S. Bureau of Economic Analysis, personal income rose by $75.1 billion (0.3 per cent on a monthly basis) in July. Disposable personal income (DPI), which is personal income minus personal current taxes, increased by $54.8 billion (0.3 per cent).

The PCE price index went up by 0.2 per cent. When excluding food and energy, the PCE price index also saw a 0.2 per cent increase (see table 5). In July, real DPI grew by 0.1 per cent, while real PCE increased by 0.4 per cent; with goods rising by 0.7 per cent and services by 0.2 per cent.

Spot gold did not immediately respond to the figures, trading at 2498.56 as of 05:51pm GMT.