Income & Spending Up in July

Washington, DC, August 31, 2007—Personal spending rose more than expected in July and inflation cooled, a signal the economy was sound at the start of the third quarter before credit markets deteriorated.

The 0.4% increasing in spending followed a 0.2% increase in June that was bigger than initially estimated, the Commerce Department.

Personal income rose 0.5% in July, the most in four months, after increasing 0.4% in June. Income was forecast to rise 0.3% after the 0.4% gain first reported. Economists forecast spending would rise 0.3%.

The report's price gauge and excluding food and energy costs rose 0.1% in July, less than the 0.2% gain projected by economists surveyed. It was up 1.9% from July 2006.

The savings rate rose to 0.7%, from 0.5% the prior month.

Disposable income increased 0.6% after rising 0.4%.

Inflation-adjusted spending on durable goods rose 0.5%. Purchases of non-durable goods rose 0.4% and spending on services, which account for almost 60% of all outlays, increased 0.2%.