WASHINGTON (TNND) — Americans continued to open up their wallets and spend last month despite higher prices and concerns about a stalling labor market, beating expectations in a bright spot for the economy amid tariff uncertainty.

Consumer spending rose 0.6% in August from the month prior, which also had a revised 0.6% increase, the Commerce Department said on Tuesday. Spending increases were relatively widespread across different sectors with gains in electronics and appliances, online shopping and restaurants.

Americans have continued to spend despite a stalling labor market with fewer job openings and slowly rising unemployment that has reduced confidence in their ability to land a job if they were to lose the one they have and driven frustrations about the economy upward.

Despite those concerns, Americans haven’t yet meaningfully cut back on spending that makes up some two-thirds of U.S. economic activity.

“Consumers say they are gloomy about the economic outlook, but they are still opening their wallets and spending, even on little splurges for themselves and their families. The big question is how long this can continue if layoffs pick up this fall and winter. But if layoffs do not pick up, consumers are likely to keep going and the economy will be able to avoid a recession and potentially pick up steam in 2026,” said Heather Long, chief economist at Navy Federal Credit Union.

Most retail categories posted a gain in August, with online sales increasing 2% and clothing stores rising 1%. Spending at bars and restaurants went up by 0.7% from last month. Excluding auto sales, which have been more volatile since President Donald Trump imposed tariffs on most foreign vehicles, retail sales jumped 0.7% in August.

Spending was down at specialty stores and furniture retailers, dropping 1.1% and 0.3%, respectively. Health shops and department stores also saw 0.1% declines.

Economists said the August jump in spending was driven in part by back-to-school shopping and consumers still trying to get ahead of tariffs. Government data on spending is also not adjusted for inflation, which may have also boosted the figures.

Inflation rose 0.4% from July to August and was 2.9% higher compared to a year ago with prices for things like gas, groceries and energy rising. The “core” reading that strips out volatile categories and is favored by the Federal Reserve was 3.1%, well above the central bank’s target of 2%.

Solid levels of spending despite economic headwinds like higher interest rates, stubborn inflation and uncertainties has been a common theme of the post-pandemic economy. That trend is continuing through the tariff-related uncertainties hitting the economy in 2025 while other parts of the economy are more rocky.

Shoppers still haven’t been hit with major price increases for most products as retailers stocked up on products to get ahead of Trump’s tariffs and gradually ease their inflation-wary customers into higher prices. Products that are more sensitive to tariffs, like furniture, have become more expensive but a growing list of stores expect prices to increase as inventories run out and they are restocked at post-tariff prices.

“While retail sales rose year over year, the key question remains whether consumers can sustain this momentum headed into the fall, especially with the holidays around the corner. The next few months hold the key to whether this is a true display of consumer stability or a shorter-term uptick given market uncertainty,” EY-Parthenon Americas Retail Sector Leader Will Auchincloss said in a note.

Hiring and job creation sputtered this summer as businesses pulled back amid economic uncertainties from tariffs. Employers added just 22,000 jobs in August, which came shortly after the first net loss in jobs since December of 2020 in June.

Keeping the labor market on track has become the priority for the Fed as it began its two-day policy meeting on Tuesday, which is broadly expected to bring the first cut to interest rates since last year. Investors have priced in a 0.25% cut for September and see higher odds of two more cuts during the October and December meetings.

Fed officials are trying to walk a delicate line of keeping the labor market from falling off track while getting inflation to return to its target level of 2%, a benchmark that hasn’t been hit in nearly five years. For now, officials appear to be more concerned about a teetering employment situation but also want to move cautiously with rates to keep inflation from getting out of control again.