Friday, September 30, 2011

U.S. consumers spend more, bring home less: Incomes down for first time in 22 months

U.S. consumers spent slightly more last month but earned less for the first time in nearly two years. The new data on spending and incomes suggest Americans tapped their savings to cope with steep gas prices and a weaker economy.

The Commerce Department said Friday that consumer spending rose 0.2 per cent in August after a revised 0.7 per cent increase in July.

Incomes fell 0.1 per cent. That's the poorest showing since a similar 0.1 per cent drop in October 2009.
Savings rate drops

Americans saved less money. The savings rate fell to its lowest level since late 2009.

A decline in income growth could slow the economy, if it causes households to cut back on spending. Consumer spending accounts for 70 per cent of economic activity.

The economy grew at an annual rate of just 0.9 per cent in the first six months of the year, the slowest growth since the recession officially ended more than two years ago.