2 Jun 2009

US consumers spend less

11:11 pm on 2 June 2009

[b Consumer spending in the United States has fallen for the second month in a row, despite people having more money in their pocket.

Official figures show spending dipped 0.1%.

Personal income rose 0.5%, its largest monthly increase since May last year, thanks to tax cuts and benefit payments from the Government's stimulus package.

Analysts say the figures reflect a more thrifty consumer as the personal savings rate, calculated as savings as a percentage of post-tax income, rose from 4.5% to 5.7%.

It is now at its highest rate since February 1995.

The decline in consumer spending seen in March and April came after shoppers splashed out at the beginning of the year, taking advantage of heavy discounting.

Consumer spending accounts for about 70% of economic activity in the US.