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.
The price of gas has risen steadily since July after sliding through the spring, according to the AAA Fuel Gauge report. A gallon of regular unleaded now costs an average of $3.79, compared to $3.47 a year ago.
Food expenses, amplified by the summer drought, are expected to continue soaring. A British trade group recently said that a worldwide shortage of pork next year is unavoidable, likely leading to surging prices for the meat.
After adjusting for inflation, consumer spending appeared to have barely budged.
The so-called real measure was up just 0.1%, even as Americans spent 0.5% more on durable goods such as vehicles and large appliances. Expenditures on nondurable items, such as fuel and food, got a 0.3% real boost.
Post-tax disposable income was down 0.3%.
High prices aside, consumers are also being weighed down by a sluggish job market and concerns about the looming "fiscal cliff." Though making promising moves, real estate indicators are still unpredictable. And households are increasingly burdened with student loans.
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Still, consumer confidence hit a four-month high in September, according to a new report issued Friday by Thomson Reuters and the University of Michigan.