Consumer spending heads higher; Durable goods orders rise

August’s U.S. consumer spending rose 0.6%, or $129.2 billion, from the prior month, led by categories such as transportation and food services, the Commerce Department reported. While spending posted significant gains from spring levels, households continued to essentially break even as personal income increased 0.4% for the month.

Factors included inflation, with a gauge closely watched by the Federal Reserve showing overall prices rising at a 2.7% annual rate. That was slightly below the 2.9% reported earlier for the Labor Department’s consumer price index, but still above the Fed’s 2% target for future interest rate reductions.

Forecasting firm Oxford Economics noted that consumer spending “rose a touch more than anticipated” in August and “rebounded vigorously” from spring’s sharp slowdown. “The drag on real incomes from rising tariffs and a slowing labor market has had less of an impact than we thought,” Oxford Deputy Chief Economist Michael Pearce said in a statement.

Oxford estimates about two-thirds of the burden of import tariffs have been passed through to consumers, though Pearce said a range of new industry-focused tariffs announced in the past week “mean further price pressures are likely on the way.”

New orders for durable manufactured goods, which often affect demand for industrial and retail real estate, rose 2.9% in August after two straight monthly declines. Analysts said that and other signs, such as easing interest rates, point to improving business prospects for U.S. manufacturers.

The Commerce Department said transportation equipment orders, up 7.9% for the month, led August gains for items meant to last more than three years. Business machine orders rose 1.3% from July, though computers and home appliances were both down 2%.

Oxford Economics lead U.S. economist Bernard Yaros noted overall U.S. industrial production held up well in August, led by categories such as information processing and aerospace equipment. Production “is poised for a lasting rebound” in 2026, aided by further interest-rate relief and reduced trade policy uncertainty, Yaros said in a statement.