Americans' income rose 0.5 percent in July, the sixth straight increase, and easily outpaced a 0.2 percent spending rise, the government said Monday.
The Commerce Department also reported that disposable income - income after taxes - rose 0.5 percent in July.Both income and disposable income had risen a mere 0.1 percent in June.
Consumer spending, which represents two-thirds of the nation's economic activity, was up for the third straight month - and in five of the past six months. But the July rise was less than the 0.5 percent advance in June and 0.6 percent gain in May.
Income last fell in January when it slipped 0.6 percent.
The combination of incomes and spending meant that Americans' savings rate - savings as a percentage of disposable income - was 4.1 percent in June, up from a revised 3.7 percent the previous month. The Commerce Department previously pegged the savings rate at 4 percent for June.
The July figures for spending and income generally were in line with analysts' expectations and appear to reflect an economy growing at a moderate pace.
The economy expanded at a 3.8 percent annual rate in the second three months of 1994.
Wages and salaries, the most closely watched component of income, increased $15.3 billion in July after a $5 billion rise in June.
Government wages and salaries rose $1.6 billion in July, after declining $1.5 billion the previous month due to a drop in buyouts for government employees who left work.
Spending on long-lasting items such as cars and appliances declined 1.1 percent in July to a seasonally adjusted annual rate of $579 billion. Spending on non-durable goods such as food and fuel rose 0.3 percent to $1.393 trillion, and spending on services was up 0.4 percent to $2.648 trillion.
Incomes rose to a seasonally adjusted annual rate of $5.693 trillion in July from $5.663 trillion.
The income and spending figures were not adjusted for inflation. When adjusted, disposable incomes rose 0.2 percent in July, while spending declined 0.2 percent.