Consumer spending in July went up twice as fast as the 0.5 percent increase posted in the previous month.
Retail sales were solid in July, helped out by free-financing for cars. Home sales for the month were also strong.
The report showed that consumers ratcheted up spending on big-ticket ''durable'' goods, including cars and appliances, by 3.7 percent in July, following a 1.6 percent increase in June.
Spending on durables, such as food and clothes, and services each rose by 0.6 percent in July. That compared with a 0.7 percent advance in durables in June and a 0.2 percent increase in spending on services.