- Associated Press - Thursday, August 30, 2012

WASHINGTON (AP) — Americans spent at the fastest pace in five months in July after earning a little more. The increase in income and consumer spending could help boost subpar growth.

The Commerce Department says consumer spending rose 0.5 percent in July after being unchanged in June and declining in May. Income grew 0.3 percent, matching the gains from May and June.

The report is closely watched because consumer spending accounts for 70 percent of economic activity.

The economy grew at a tepid annual rate of 1.7 percent in the April-June quarter. Many economists expect growth will hover around 2 percent in the second half of the year, a pace too weak to lower the unemployment rate.