Consumer spending picks up

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.