U.S. personal income in December grew at its strongest pace since the summer, the Commerce Department reported on Thursday, boosting the outlook for economic growth ahead, although spending dipped a bit.

Commerce said income, including wages, salaries and other sources of income such as rent, grew by 0.4 percent in December, the biggest gain since July, when it also saw a 0.4 percent increase. For the second month in a row, though, Americans cut back on their spending, as consumption expenditures fell by 0.2 percent after a 0.3 percent fall in November.

Recent readings on the economy have shown it may be shaking off the recession it has been in since March 2001. Economists were taken by surprise on Wednesday when Commerce reported U.S. gross domestic product (GDP) grew at a 0.2 percent annual rate in the fourth quarter, defying predictions of a contraction.

But even if the economy has bottomed out, the strength of the rebound is a matter of concern to policymakers. The Federal Reserve on Wednesday decided to leave interest rates unchanged after cutting them 11 times in 2001, but noted the risks to the economy were still tilted toward weakness. Growth in income, though, may ease those fears, as it suggests consumers are not tapped out yet.

Analysts polled by Reuters last week had expected income to post a 0.3 percent gain and spending to have declined by 0.1 percent.