A report released by the Commerce Department on Thursday showed personal income and spending in the U.S. both increased in line with economist estimates in the month of July.
The Commerce Department said personal income rose by 0.3 percent in July after climbing by 0.4 percent in June. The increase in income matched expectations.
Disposable personal income, or personal income less personal current taxes, also climbed by 0.3 percent in July following a 0.4 percent increase in the previous month.
The report also said personal spending advanced by 0.4 percent in July, matching the increase in the previous month as well as economist estimates.
Real spending, which is adjusted to remove price changes, edged up by 0.2 percent in July after rising by 0.3 percent in June.
“The data suggest that much of the strength of consumption growth in the second quarter has carried over into the third,” said Andrew Hunter, U.S. Economist at Capital Economics.
He added, “As things stand, real consumption is on track for a gain of between 3% and 3.5% annualized in the third quarter, and we expect that overall GDP will expand at a similar rate too.”
With spending rising by slightly more than income, personal saving as a percentage of disposable income slipped to 6.7 percent in July from 6.8 percent in June.
The report also said a reading on inflation said to be preferred by the Federal Reserve showed the annual rate of core consumer price growth ticked up to 2.0 percent in July from 1.9 percent in June.
“Fed officials apparently expect core inflation to rise no further from here, but we suspect those projections will prove too sanguine, particularly with wage growth starting to show clearer signs of acceleration,” Hunter said. “In that context, the Fed is likely to continue raising interest rates once a quarter.”