Washington, DC, Aug. 29--Personal spending climbed in July as consumers continued to help fuel the economic recovery.
Spending increased 0.8% last month, the largest gain since March, after rising a revised 0.6% in June, the Commerce Department reported Friday. Personal income climbed 0.2%, after a revised 0.4% increase in the prior month. The data was on target with consensus estimates.
The report provided fresh evidence that consumers are still doing their part to keep the economy going. Consumer spending accounts for roughly two-thirds of all economic activity in the U.S., which means shoppers' behavior is a major factor in shaping the recovery.
Spending on durable goods, or big-ticket items that are meant to last three years or more, advanced 2.1%, more than double June's 1% increase, amid strong auto sales. Spending on nondurable goods such as food and clothing increased by 0.8% after a comparable rise in the prior month.
Spending on services rose 0.5%, after June's 0.4% gain, helped by increased electricity usage due to hot weather.
Disposable income, or what is left after taxes, jumped 1.5%, the largest increase since January 2002 and more than triple the 0.4% recorded in June.
The government attributed much of July's increase to the president's tax cut. Excluding the tax effect, disposable income increased by a more modest 0.2%.
Personal saving as a percentage of after-tax income rose to 3.8% from 3.1% in June.
An inflation measure in the report increased. A price index for personal consumption expenditures less food and energy rose at a 1.4% rate in July, after rising at a 1.2% rate in June.
