Consumer spending picks up

By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney.com) -- Consumer spending rose in July, but Americans remain wary about the future of the economy.

Personal spending rose by $44.1 billion last month, or 0.4%, after falling less than 0.1% in June. This came in above the 0.3% increase economists expected.

"It's just a modest increase, which shows consumers are still cautious about spending decisions," said Anika Khan, economist at Wells Fargo.

She also noted the spending jump was linked to a rise in car sales, which could be "a seasonal quirk" because some auto plants stayed open in the summer.

Income and savings: Personal income edged up $30 billion, or 0.2%, last month, following a revised 0.1% decline in June, the Commerce Department said.

A consensus of economists polled by Briefing.com expected personal income to climb 0.2% in July.

Monday's report also showed consumers were saving less in July. Personal savings as a percentage of disposable income rose 5.9%, down from last month's downwardly revised 6.2% in June.

June 2010's savings rate was the highest since June 2009, when the reading came in at 6.7%.

"Even though the savings rate edged down over the month, it's still very high," Khan said.

Paul Dales, U.S. economist at Capital Economics, agreed the savings rate "remains high by the standards of the last 20 years."

Households are set on paying down their debt, which will help the economy in the medium term, Dales wrote in a research note. But that benefit will take time, and it will hurt near-term growth.

"Overall, the U.S. economy cannot rely on households to lift it out of its current funk," he said. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 18,162.99 121.45 0.67%
Nasdaq 5,106.59 73.84 1.47%
S&P 500 2,123.48 19.28 0.92%
Treasuries 2.13 -0.01 -0.23%
Data as of 8:58am ET
Company Price Change % Change
AbbVie Inc 67.38 1.28 1.94%
Lorillard Inc 72.16 0.66 0.91%
General Electric Co 27.52 0.00 0.00%
Cisco Systems Inc 29.31 0.36 1.24%
Ford Motor Co 15.32 0.13 0.86%
Data as of May 27
Sponsors

Sections

Workers with college and graduate school degrees saw their wages fall the most last year. The least educated saw a slight bump in pay. More

Karlos Dansby, a linebacker with the Cleveland Browns, is bringing his winning strategy from the football field into the startup arena. More

Wealthy millennial women are more likely to make at least as much -- if not more -- than their husbands, and are more likely to be the dominant decision-makers on household finances and investments, according to a new report. More