Personal Income and Spending Up in August

Washington, DC, September 28, 2007—Personal spending rose 0.6 % in August for the largest increase in four months, according to the Commerce Department. The gauge rose 0.4% in July.

Personal income was up 0.3% in August after increasing 0.5 % in July.

Economists were anticipating an increase of 0.4% in both spending and income.

Adjusted for inflation, spending also rose 0.6 % in August, the most since October, after a 0.3 % gain the prior month, the report showed.

Because the increase in spending was larger than the gain in incomes, the savings rate fell to 0.7 %, from 0.9 % the prior month.

Disposable income, or the money left over after taxes, increased 0.4 % after rising 0.6 %.

Inflation-adjusted spending on durables rose 2.8 %. Non-durable spending was little changed and spending on services rose 0.6 %.

A decline in confidence hasn't translated into a collapse in spending, which makes up more than two-thirds of the economy. So far, wage gains helped shield consumers from the effects of a worsening real-estate recession.