Americans spent last month at the fastest pace in four months, helped by a jump in demand for automobiles.

Consumer spending rose 0.4 percent in July after three lackluster months, the Commerce Department said Monday. Spending fell 0.1 percent in April, rose a tiny 0.1 percent in May and was flat in June.

Personal incomes were up 0.2 percent in July, less than expected but at least an improvement over June when incomes had not risen at all.

The July spending gain was the highest since a 0.5 percent rise in March. But the concern is that demand could taper off in the second half of this year if unemployment remains near double digits.

If Americans don't have jobs, they don't have the income to support spending. Consumer spending is critical because it accounts for 70 percent of economic activity.

With spending rising, the personal savings rate slowed to 5.9 percent of after-tax income. That's down from 6.2 percent in June, the highest in nearly a year. Even with the July decline, the savings rate is nearly three times higher than it was before the recession began in December 2007.

Economists had long worried about low savings in the United States. But now they fear households have become too frugal and that is holding back consumer spending.

The gain in spending reflected a 1 percent jump in demand for durable goods. About half of that increase came from a jump in auto sales, the government said.

More Top Stories

All It Takes Is a Greek Story to Further Scare Markets

Even Pros Don't Like Stocks: Could That Be Bullish Sign?

Hedge Fund Elite: What Our 'Best Ideas' Are Now

Fed Members Favor More Easing if Economy Falters

'London Whale,' Who Lost $2 Billion, to Leave JPMorgan

More Top Stories