The sunshine this summer must have left Americans with holes burning in their pockets.
According to the Bureau of Economic Analysis, consumer spending in the U.S. rose more than expected in the month of July.
In fact, consumer spending -- which accounts for roughly 70% of U.S. economic activity -- rose 0.8% (roughly $144.6 billion). It's the largest increase in six months.
The increase in spending was mostly related to recreational items, pharmaceuticals, groceries, vehicles and clothing.
"The current pace of increase in consumer spending is, however, unlikely sustainable," Reuters reported. "Households are drawing down excess savings accumulated during the COVID-19 pandemic. Student debt repayments resume in October for millions of Americans and higher borrowing costs could make it harder for consumers to keep using credit cards to fund purchases."
According to the BEA report, the $144.6 billion increase in July reflects increases of $102.7 billion in spending for services and $41.9 billion in spending for goods.
Within services, the largest contributors to the increase were financial services and insurance (led by portfolio management and investment advice
services), housing and utilities, food services and accommodations, and health care.
Within goods, the largest contributors to the increase were “other” nondurable goods (led by pharmaceuticals and recreational items), food
and beverages (led by groceries), and recreational goods and vehicles (led by video, audio, photographic, and information processing equipment and media).
The analysis also shows that Americans were paying more in July for the same items versus a month earlier. Prices for services increased 0.4%, food prices increased 0.2% and energy prices increased 0.1%.