WASHINGTON — Consumer spending increased in July at the fastest pace in three months, while incomes grew by the largest amount since February, both encouraging signs for future economic growth.
Consumer spending rose 0.3 percent in July, the best showing since April, the Commerce Department reported Thursday. It followed 0.2 percent advances in both May and June. Incomes in June grew 0.4 percent, the best showing since February. The strength came from a strong 0.5 percent rise in wages and salaries, reflecting the healthy 209,000 gain in employment in July.
Economists said the report showed that Americans are feeling confident enough to boost their spending, which accounts for 70 percent of the country’s economic activity.
“Consumer spending looks rock solid,” said Chris Rupkey, chief financial economist at MUFG Union Bank in New York. “The consumer continues to do the heavy lifting when it comes to economic growth as corporations hold back investment plans until they see what tax reform proposals make it through Congress.”
Rupkey said he was expecting consumer spending to support overall economic growth of around 2.8 percent in the current July-September quarter.
Thursday’s spending report showed a strong 0.6 percent increase in purchases of durable goods such as autos and a solid 0.5 percent rise in demand for non-durable goods such as food and clothing. Spending on services such as utilities and doctor’s visits rose 0.2 percent.