WASHINGTON — Consumer spending increased in July at the fastest pace in three months, while incomes grew by the largest amount since February, the Commerce Department reported Thursday.
Consumer spending rose 0.3 percent in July, the best showing since April. It followed 0.2 percent advances in May and June. Incomes in June grew 0.4 percent, the best showing since February. The strength came from a strong 0.5 percent rise in wages and salaries, reflecting the healthy 209,000 gain in employment in July.
Economists said the report showed that Americans are feeling confident enough to increase their spending, which accounts for 70 percent of the country’s economic activity.
“Consumer spending looks rock solid,” said Chris Rupkey, chief financial economist at MUFG Union Bank in New York. “The consumer continues to do the heavy lifting when it comes to economic growth as corporations hold back investment plans until they see what tax reform proposals make it through Congress.”
Rupkey said he was expecting consumer spending to support overall economic growth of around 2.8 percent in the current July-September quarter.
A key inflation gauge favored by the Federal Reserve posted a tiny 0.1 percent increase in July. Over the past 12 months, it is up just 1.4 percent, still well below the Fed’s 2 percent target.
Inflation has been running below the Fed’s target for…