Consumer Spending

Americans spent more in August than the month before, buying more cars and paying up for gas. But many funded their expenditures by raiding their savings accounts. Consumer spending, a major contributor to the country's economic activity, increased 0.5%, or $57.2 billion, to a total of $11.2 trillion. The gauge had risen 0.4% in July, according to the Commerce Department . But personal income only grew 0.1%, the same amount as in July. The savings rate slipped to 3.7% of after-tax income after reaching 4.1% the previous month.

Shoppers hit the malls for back-to-school shopping in August and handed retailers a healthy boost in sales despite continued worries about the job market and a sluggish economy. With many Southland schools already starting their fall terms and more opening in the next few weeks, retailers have aggressively pushed promotions to encourage shoppers to scoop up backpacks, clothes and notebooks. Analysts say brisk sales during back-to-school months are an encouraging sign for the upcoming holiday season.

Consumer spending, a top economic motivator, made its biggest jump in five months - but uncertainty over rising gas prices, still-high unemployment, a looming fiscal cliff and the election threaten to keep growth subdued. Personal consumption expenditures rose 0.4% to $46 billion in July, the Commerce Department said. In the previous month, the measure barely rose. The uptick in spending likely resulted from rising incomes, which grew 0.3% in July - slightly less than in June but continuing the gauge's 8-month run of gains.

Retail sales fell in June for the third straight month, knocking down economic growth projections for the second quarter and dimming the outlook for hiring in the near term. The 0.5% drop from May was broad-based; consumers pulled back on spending for cars, electronics, furniture, building materials and other goods, the Commerce Department reported Monday. The report surprised analysts, who were expecting a small increase in retail sales after two prior months of declines.

WASHINGTON -- Consumer confidence has fallen to its lowest level of the year this month as discouraging economic news here and abroad erodes Americans' view of the recovery. The preliminary reading for July from the Thomson Reuters/University of Michigan Survey of Consumers fell to 72 from June's figure of 73.2, the second straight monthly decline, Reuters reported Friday. Economists surveyed separately by Bloomberg had expected the confidence reading to tick up to 73.5.

It's the consumer version of June gloom: Americans this month are the most down and out they've been in five months, as hiring and income prospects dim. An index of sentiment compiled by the Conference Board slid to 62 in June from 64.4 in May, the fourth consecutive decline. “If this trend continues, spending may be restrained in the short term,” said Lynn Franco, the Conference Board's director of economic indicators, in a statement. Consumer spending makes up the majority of the U.S. economy.

Consumer spending, a critical economic driver, is on the up. So is construction spending, lending credence to the idea that the housing market is stabilizing and headed for recovery. Still, Wall Street is wringing its hands. Even without the dismal jobs report, which saw the unemployment rate rise to 8.2% and job growth slow, a mixed bag of economic data released Friday was enough to leave investors feeling unbalanced. Construction spending for April reached an annual rate of $820.7 billion - 0.3% above March's revised increase and 6.8% more than in April 2011.

By the end of next year, the unemployment rate will be at 7.5%. Consumer spending will be up, as will housing starts. But first, the economic recovery needs to slog its way through the remainder of 2012, economists said. Monthly non-farm job growth will grow to 188,000 a month by the end of this year, up from 115,000 in April. That will cause the jobless rate to slide minimally to 8% by the fourth quarter from 8.1% now, according to a survey of 54 economists by the National Assn.

Shoppers appeared more cautious about spending in April as cold weather and fresh concerns about the economy curbed people's urge to shop, prompting worries about a possible slowdown in spending in the summer months. Weak April sales reported by major retailers and jitters about U.S. unemployment data helped push the stock market down Thursday, with the Dow Jones industrial average falling 61.98 points, or 0.47%, to 13,206.59. Retail analysts remained cautiously positive about the coming months, but warned that more bad news about the economy could further dampen consumer spending.