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A report released by the Commerce Department on Friday showed U.S. personal income rose in line with economist estimates in the month of August, although personal spending inched up by less than expected.
The Commerce Department said personal income climbed by 0.4 percent in August after ticking up by 0.1 percent in July. The increase in income matched economist estimates.
Disposable personal income, or personal income less personal current taxes, increased by 0.5 percent in August after rising by 0.3 percent in the previous month.
Meanwhile, the report said personal spending crept up by 0.1 percent in August after climbing by 0.5 percent in July. Spending had been expected to rise by 0.3 percent.
Real spending, which is adjusted to remove price changes, also inched up by 0.1 percent in August after rising by 0.3 percent in the previous month.
"The August personal spending figures, which incorporated downward revisions to earlier months, suggest that third-quarter real consumption growth was 2.6% annualized, well below the 3.5% gain we previously anticipated," said Paul Ashworth, Chief U.S. Economist at Capital Economics.
Ashworth added, "As a result, we now estimate that third-quarter GDP growth was 1.5% rather than 2.0%."
With income climbing by much more than spending, personal saving as a percentage of disposable personal income jumped to 8.1 percent in August from 7.8 percent in July.
A reading on inflation said to be preferred by the Federal Reserve showed the annual rate of core consumer price growth accelerated to 1.7 percent from 1.6 percent.
"Alongside the slowdown in consumption growth, the rebound in underlying inflation is making the Fed's job just that little bit harder," Ashworth said.