Consumer spending, a top economic motivator, made its biggest jump in five months – but uncertainty over rising gas prices, still-high unemployment, a looming fiscal cliff and the election threaten to keep growth subdued.
Personal consumption expenditures rose 0.4% to $46 billion in July, the Commerce Department said. In the previous month, the measure barely rose.
The uptick in spending likely resulted from rising incomes, which grew 0.3% in July – slightly less than in June but continuing the gauge's 8-month run of gains.
Americans saved less in July, at a 4.2% rate compared with June's 12-month high of 4.3%.
"A higher saving rate is usually a sign of more consumer caution/lower consumer confidence, and we had disappointment on that front earlier this week," wrote Jonathan Basile, economics director at Credit Suisse, in a report Thursday.
Many consumers are still wary of instability in the economy. Though incomes in the second quarter got a 4.2% boost, representing much stronger growth than most of 2011, the increase was smaller than the first quarter's 6.6% swell.
And spending in the most recent quarter escalated 2.4% -- the weakest quarterly expansion in years.
On Wednesday, the government said the nation's gross domestic product expanded at an annual rate of 1.7% in the second quarter – higher than expected but also the slowest growth since last summer.
Corporations continue to perform better than households. Bank profits alone made a nearly 21% year-over-year improvement in the second quarter.
One bright spot, however: The back-to-school shopping rush caused retail sales to surge 3.6% in August, beating analyst expectations, Thomson Reuters revealed Thursday.