Consumer spending and incomes fall; savings rise
2/2/2009WASHINGTON Consumer spending fell for a record sixth straight month in December as recession-battered households, worried about surging layoffs, boosted their savings rates to the highest level since May.
The Commerce Department says personal consumption spending, which accounts for the largest portion of total economic activity, dropped by 1 percent in December. That was slightly worse than the 0.9 percent decline economists expected.
Incomes, reflecting a wave of layoffs, fell for a third straight month, dropping by 0.2 percent.
Worried about the possibility of more job cuts, Americans boosted their savings rate to 3.6 percent of their after-tax incomes in December. That was the highest level since tax rebate checks temporarily pushed the rate up to 4.8 percent in May.