US spending still on the rise

US consumer spending rose in August for a fourth month as cash gained from reduced income tax withholding rates helped boost purchases at stores and auto dealerships, a government report showed.

The 0.8% increase last month followed a 0.9% rise in July, the Commerce Department said in Washington.

Disposable income, or the money left after taxes, rose 0.9% after increasing 1.5%.

Some $330 billion in tax cuts and record amounts of mortgage refinancing months ago gave consumers the wherewithal to spend.

Wal-Mart Stores Inc. said September sales will rise as much as 5%. Increased purchases may help produce this quarter the fastest pace of economic growth since the last three months of 1999, according to some economists’ forecasts.

“There seems to a never-ending ability to consume,’ said Drew Matus, senior economist at Lehman Brothers Inc., who forecasts growth of 5% for the third quarter. “The consumer is certainly driving this quarter ahead, particularly with auto and housing sales.”