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Spending by U.S. consumers climbed in August by the most since 2001, indicating the biggest part of the economy is starting to rebound from its worst slump in almost three decades.
The 1.3 percent increase in purchases was larger than forecast and followed a 0.3 percent gain in the prior month that was bigger than previously estimated, Commerce Department figures showed today in Washington. Incomes climbed 0.2 percent for a second month and inflation decelerated.

Automakers including General Motors Co. benefited from the Obama administration’s $3 billion “cash-for-clunkers” incentives. A projected drop in auto purchases last month is a reminder that such gains will be hard to sustain as the stimulus programs expire and households grapple with rising joblessness and stagnant incomes.

“This is not just a cash-for-clunkers story, spending is back in other areas as well,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, who correctly forecast the gain in spending. “It looks to be a slow and steady recovery. The labor market is key for whether or not the consumer will continue to spend into the fourth quarter.”