Americans Snapped Wallets Shut Last Month, Squirreled Away More

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/ Source: Reuters

Consumer spending unexpectedly fell in July as savings rose to their highest level in more than 1-1/2 years, a sign that households remain cautious despite an acceleration in economic and jobs growth. The Commerce Department said on Friday consumer spending dipped 0.1 percent last month, the first decline since January. Economists had expected consumer spending, which accounts for more than two-thirds of U.S. economic activity, to increase 0.2 percent in July. The weakness in consumer spending at the start of the third quarter will probably do little to change perceptions that the economy has retained much of its second-quarter momentum. Other sectors of the economy such as housing, business spending, exports and government activity are accelerating. In addition, labor market conditions are strengthening. Savings increased to $739.1 billion in July, the highest level since December 2012. At 5.7 percent, the saving rate was also the highest since December 2012.

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- Reuters