Autos, electricity push consumer spending to 5-month high in July
In a cheering sign for the economy, consumer spending grew 0.8% in July, the most in five months, the government said Monday.
Expenditures, which make up 70% of economic activity, had fallen slightly in June, causing many to worry about a potential double-dip recession.
But in July, Americans spent heavily -- $88.4 billion more than the month before -- and saved less, the Commerce Department said. Personal incomes were up 0.3%, or $42.4 billion as the savings rate dropped to 5% from 5.5% a month earlier.
Spending on electricity made up most of the gain, as a nationwide heat wave had Americans pumping their air conditioners and fans. Car buying was also up, as the post-earthquake recovery in Japan helped smooth out the delayed supply chain.
But early figures for consumer confidence in August are disquieting. The July consumer spending figures don’t account for the volatile mood that descended this month after the nation’s debt rating was downgraded and stocks began swinging wildly.
-- Tiffany Hsu
Photo: A woman pushes a cart in the parking lot of a Little Rock, Ark., Wal-Mart store. Credit: Danny Johnston / Associated Press