US consumer spending jumped in July Erases recession fears

US consumer spending jumped to 0.8% in July compared to 0.1% fall in the previous month June. This is the fastest pace of growth in consumer spending in last 5 months which has helped to increase the hope that the US economy is not going back to recession now. This jump is consumer spending is much better than the expectation of 0.5%.

The overall consumer spending accounts for nearly 70% of the US economic activity and GDP. This jump is consumer spending will definitely push the GDP numbers for the month of July. The US GDP grew by only 0.4% and 1% during the first and second quarter respectively and the unemployment rate is now at 9.1% which has decreased the consumer confidence in the recent times. This increase in consumer spending shows the increased consumer confidence in spite of adverse economic news. This data has also boosted the investor confidence with US stock market indexes jump by nearly 2% and smart gains by all the Asian market stock indexes. Now we have to wait for the current quarter GDP data to get the actual picture of its affect.