U.S. Consumer Spending Accelerates in July

U.S. consumer spending increased by the most in six months in July as Americans bought more goods and services.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.8% last month. Data for June was revised slightly higher to show spending rising 0.6% instead of 0.5% as previously reported.

Spending on goods increased 0.7% last month mostly reflecting products with a short life span, including pharmaceuticals, recreational items, groceries and clothing. There were also increases in outlays on recreational goods and vehicles as well as household furnishings and equipment and other long-lasting goods. Services spending increased 0.8%, driven by portfolio management and investment advice services, housing and utilities, restaurants and healthcare.

When adjusted for inflation, consumer spending increased 0.6%, also the largest gain since January. The so-called real consumer spending rose 0.4% in June. Last month’s solid increase put real consumer spending on a higher growth path at the start of the third quarter, prompting economists to raise their gross domestic product estimates.