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 16,804.71 -238.19 -1.40%
Nasdaq 4,422.09 -71.31 -1.59%
S&P 500 1,946.16 -26.13 -1.32%
Treasuries 2.40 -0.10 -4.19%
Data as of 4:32am ET
Company Price Change % Change
Bank of America Corp... 16.82 -0.23 -1.35%
Ford Motor Co 14.59 -0.20 -1.34%
Facebook Inc 76.55 -2.49 -3.15%
Apple Inc 99.18 -1.57 -1.56%
Cisco Systems Inc 25.03 -0.18 -0.72%
Data as of Oct 1

Sections

In the last five years, pumpkin sales have risen 34% as people demand pumpkin in everything from beer to beef jerky. More

Facebook's chief product officer issued an apology to Sister Roma and the drag community on Wednesday for its flawed 'real name' policy. More

New York City launches a comprehensive site for all things related to its digital tech scene, Digital.NYC. More

For these seniors, the best retirement is not to retire. From a 102-year-old Wal-Mart worker to an activist park ranger, these workers have stayed on the job well into their golden years. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.