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[News] Consumer Spending Up Slightly

Consumer spending rose 0.2 percent in July, increasing for the third month in a row, although at a lower rate than the month before, the Commerce Department reported today.

The increase was driven in large part by automotive sales under the Cash for Clunkers program and was largely what economists has predicted. The spending rate was down from the 0.6 percent increase posted in June, possibly due to increasing consumer anxiety over prospects for an economic recovery.

Consumer confidence declined slightly in August, according to the monthly Reuters/University of Michigan Survey of Consumers, with buyers at their most pessimistic early in the month. The Consumer Confidence Index fell as low as 63.2 in early August, down from 66.0 in July, before rebounding to 65.7 at month’s end.

“Confidence rebounded in late August as consumers increasingly expected improved conditions in the national economy even as they reported the worst assessments of their finances since the surveys began in 1946,” the report said.

The final confidence level was still higher than the 64.5 level economists had predicted, according to Reuters.

Personal incomes rose by less than 0.1 percent in July, according to the Commerce Department, reversing a 1.1 percent decline in June, following a temporary boost attributed to the impact of the 2009 income tax credit stimulus. With spending exceeding the rise in incomes, the personal savings rate declined to 4.2 percent of income from 4.5 percent in June.

Inflationary prices remained low, with prices for personal consumer expenditures, excluding food and energy, rising only 0.1 percent in July, compared with a 0.5 percent increase in June.

Wages and salaries in the private sector rose 0.1 percent in July, the first increase in nearly a year. Income from small businesses was up 0.6 percent.

Spending on durable goods increased 1.8 percent in July, due to automobile sales spurred by the Cash for Clunkers program. Spending on nondurable goods decreased by 0.3 percent.

 

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