WASHINGTON — Americans spent at the fastest pace in five months in July after earning a little more. The increase in income and consumer spending could help boost an economy mired in subpar growth.
Consumer spending rose 0.4 percent in July from June, the Commerce Department said Thursday. That followed no change in June and a slight decline in May.
Income grew 0.3 percent, matching the gains from May and June. Americans also earned 0.3 percent more after paying taxes.
The savings rate after taxes dipped to 4.2 percent in July. That’s down slightly from 4.3 percent in June, the highest in a year.
Consumer spending is closely watched because it accounts for 70 percent of economic activity.
Paul Dales, senior U.S. economist at Capital Economics, said that the rise in spending showed “there is still life in American consumers.” But he cautioned that higher gasoline prices and a decline in consumer confidence in August could dampen spending in coming months.