American consumers opened their wallets a little last month as consumer spending rose at a 0.4 percent annual rate, the fastest increase in four months, the Commerce Department said.
Consumer spending accounts for 70 percent of U.S. economic activity and is closely watched in the transportation sector, where it accounts for a large share of containerized imports and truck and intermodal rail freight.
Last month’s increase was boosted by sales of autos, which sold at an annual pace of 11.6 million vehicles. That’s up from 11.2 million in June but continued an up-and-down pattern that has prevailed this year.
By The Numbers: U.S. Retail Inventory to Sales Ratio.
The increase in consumer spending followed a flat June, a 0.1 percent annual rate of increase in May and a drop of 0.1 percent in April.
Adjusted for inflation, consumer spending rose 0.2 percent after a 0.1 percent increase in July. Spending rose at a 0.5 percent rate in March.
Last month’s increase in consumer spending outstripped a 0.2 percent rise in personal income in July, suggesting to some economists that the revival in spending may not last.
With spending rising, the personal savings rate slowed to 5.9 percent of after-tax income. That's down from 6.2 percent in June, the highest in nearly a year. Even with the July decline, the savings rate is nearly three times higher than it was before the recession began in December 2007.
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