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Consumers saw their incomes rise in April, but so far they seem to be putting much of their spare money into savings.
Figures released Thursday by the Commerce Department show that personal income was up 1.4 percent in April, which comes on the heels of a 0.7 percent increase in March. The two previous months had seen a 0.3 percent fall in personal income, suggesting that the recession is showing signs of leveling off.
However, a full economic recovery will depend at least in part on increased consumer spending. And the higher savings rate suggests that this is not going to happen, at least in the short term.
According to the new figures, the personal savings rate was 6.9 percent in May, up from the 5.6 percent that was recorded in April.
Despite concern about weak consumer spending, economists had also long been alarmed by a nationwide savings rate that was closer to zero percent in recent years. Other recent government reports have shown consumers continuing to make headway on the billions of dollars in credit card debt they have racked up this decade.
By Bill Laforme
Consumers earned and saved more last month
Consumers saw their incomes rise in April, but so far they seem to be putting much of their spare money into savings. Figures released Thursday by the Commerce Department show that personal income was up 1.4 percent in April, which comes on the heels of a 0.7 percent increase in March. The two previous months had seen a 0.3 percent fall in personal income, suggesting that the recession is showing signs of leveling off.
However, a full economic recovery will depend at least in part on increased consumer spending. And the higher savings rate suggests that this is not going to happen, at least in the short term.
According to the new figures, the personal savings rate was 6.9 percent in May, up from the 5.6 percent that was recorded in April.
Despite concern about weak consumer spending, economists had also long been alarmed by a nationwide savings rate that was closer to zero percent in recent years. Other recent government reports have shown consumers continuing to make headway on the billions of dollars in credit card debt they have racked up this decade.
By Bill Laforme
