Consumers rebounded in July to boost spending by the most in five months. The increase is likely to ease fears that the U.S. economy is on the verge of another recession, The Associated Press reports.
The Commerce Department said Monday that consumer spending rose 0.8 percent in July. That followed the first decline in spending in 20 months.
Personal incomes increased 0.3 percent last month. That’s slightly higher than the modest 0.2 percent in June, the weakest growth in seven months.
The first look at spending in the second half of the year gave Wall Street an early lift. Stock futures rose after its release. It added to positive reports that Hurricane Irene didn’t do as much damage as feared.
Consumer spending is important because it accounts for 70 percent of economic activity.
Strong spending in July is the latest sign that the economy rebounded this summer after anemic growth in the first half of the year. The government reported Friday that the economy expanded at an annual rate of just 1 percent in the April-June period, slower than a previous estimate. That lowered the annual rate for the first six months of the year to just 0.7 percent, the weakest growth in the two years since the recession official ended.
Nine of the past 11 recession since the end of World War II have been preceded by a period of growth of 1 percent or less.
