Strong US spending dims hopes for big Fed rate cut

US consumer spending increased solidly in July, suggesting the economy remained on firmer ground early in the third quarter and arguing against a half-percentage-point interest rate cut from the Federal Reserve next month. The report from the Commerce Department on Friday also showed prices rising moderately last month, curbing inflation.

A jump in the unemployment rate to a near three-year high of 4.3 per cent in July stoked fears of a recession, leading financial markets and some economists...