US consumer spending expected to show stronger gain in July

Economic Indicators Associated Press

In this Saturday, June 6, 2015 photo, a customer at left pays for produce with cash to a worker at a stand at the Atlanta Farmers Market. The Commerce Department releases personal income and spending for July on Friday, Aug. 28, 2015. (AP Photo/David ... Goldman) (The Associated Press)

The Commerce Department releases its July report on consumer spending, which accounts for 70 percent of economic activity.

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SPENDING UP: The expectation is that spending rose 0.4 percent in July, according to a survey of economists by data firm FactSet. These analysts forecast that incomes also grew 0.4 percent in July.

JUNE SLOWDOWN: In June, consumer spending rose by just 0.2 percent, the smallest gain in four months, as shoppers cut back on purchases of cars and other big-ticket items.

The overall economy, as measured by the gross domestic product, grew at a healthy 3.7 percent pace in the April-June quarter, the government reported Thursday, in a sharp upward revision of an earlier estimate of a more moderate gain of 2.3 percent.

Part of the newfound strength came from an upward revision in consumer spending, which grew at a 3.1 percent rate in the spring, up sharply from a gain of 1.8 percent in the first quarter, when a harsh winter kept shoppers away from stores.

Economists believe that growth will remain solid in the current July-September period. They believe consumer spending will be supported by further strong gains in employment. The jobless rate in July was at a seven-year low of 5.3 percent. More people working supports continued gains in consumer spending.