EmailPersonal spending increased a robust 0.8% in July after declining 0.1% in June, which was the first decline since June 2010. That was the strongest spending gain since February. The Briefing.com consensus expected spending to increase 0.5%.
The rebound in spending came mainly from the motor vehicle sector, which was a main driver of the drop in spending in June.
Personal income increased 0.3% in July, up from 0.2% in June. The consensus expected personal income to increase 0.4%.
The big jump in spending combined with the relatively sluggish growth in personal income caused the savings rate to tumble from 5.5% in June to 5.0% in July.
In real terms, spending outperformed expectations as well. Even though consumer prices increased 0.4% in July, that was slightly weaker than the 0.5% increase assumed by the July CPI report. After adjusting for inflation, real consumption increased 0.5%, which is the strongest monthly gain since December 2009.
