Trump’s tariffs are driving a wedge through the US economy, further separating the haves from the have-nots

 

August; but their living costs were increasing as food and other items became progressively more costly last month and services prices continued to be obstinately high.

New economic statistics released Friday indicated that consumer spending increased 0.6% in the important back-to-school shopping month of August, and 0.4% when factoring in inflation. That's additional evidence that a key driver of the US economy continues to roll along even as overall uncertainty and a slowdown in the job market.

But that spending is more and more concentrated on discretionary purchases, like health care, when earnings increases aren't keeping pace.

Meanwhile, some prices — including those subject to tariffs imposed by President Donald Trump at their steepest — are increasing more rapidly than they have in months, Commerce Department data released Friday show.

Not all families are riding out the tariff storm in the same way," EY-Parthenon economist Greg Daco said in a Friday investor note, and further stating that overall consumer spending "appears to be broad-based consumer strength, but a silent majority is increasingly struggling with higher grocery, furniture, auto, and services prices.

The Personal Consumption Expenditures inflation gauge the Federal Reserve tracks in aiming for its 2% target rate increased 0.3% on a monthly basis (from a 0.2% rise in July), taking the year-over-year pace to 2.7% from 2.6%, and marking a six-month high.

Energy and gas prices increased in August, and that was a major cause of the monthly rise; nevertheless, food prices jumped up too. Those were up 0.5%, the largest one-month increase since March, and are now up 2.2% compared to last year.