Consumer Spending Increased in July

Surpassing economists' forecasts, U.S. consumer spending rose 0.8 percent last month, the largest gain since February.

August 30, 2011

NEW YORK - Consumer spending in the United States posted its largest increase in five months, Reuters reports.

The Commerce Department said consumer spending was up 0.8 percent last month, the largest gain since February, after falling 0.1 percent in June. Economists polled by Reuters had expected spending, which accounts for roughly 70 percent of U.S. economic activity, to increase just 0.5 percent.

The data offered hope of a continued, though deliberate, expansion. However, recession risks are also up as stock prices have fallen recently and consumer sentiment remains low.

Spending in July was led by a 0.3 percent rise in income, compared with 0.2 percent in June.

Disposable income rose 0.3 percent, but when adjusted for inflation, it was actually down 0.1 percent.

Meanwhile, the housing market remains weak, with the pending home sales index down 1.3 percent last month (though the figure was 14.4 percent higher since July of 2010).

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