US consumer spending rose for the third consecutive month in July while incomes were virtually flat.
The US Commerce Department said consumer spending - which drives two-thirds of US economic activity - rose 0.2% in July, in line with the average analyst forecast.
Personal income was up less than 0.1% and disposable personal income - income less personal taxes - slipped less than 0.1%.
The department said spending rose a revised 0.6% in June, a hefty 0.2% higher than the initial estimate.
The June surge in consumer spending had been captured in yesterday’s Commerce Department's report on second-quarter economic growth, which showed spending fell at an annualized rate of 1%, a decline less steep than first estimated.
In that report, the department left unchanged its initial estimate that gross domestic product, which measures output, shrank 1% at an annual pace in the April-June period, better than analysts forecasts of a 1.5% decline.
Today’s consumer spending and income data showed that consumer prices held steady in July from June. As a result, real consumer spending - excluding price variations - rose 0.2% in July.
Real disposable income fell 0.1% in July, following a 1.6% decline in June.
Americans struggling with the worst recession since the Great Depression continued to save in July but at a slower pace, with the savings rate as a percentage of disposable income falling to 4.2%.
The savings rate had hit its highest level since 1995 in May as households held tight as unemployment surged in the sharp recession that began in December 2007.
