Americans earning more, but saving less than ever


Associated Press

WASHINGTON – Americans’ incomes rose solidly in August but their spending went up faster, pulling the nation’s personal savings rate down to a record monthly low.

The Commerce Department reported today that personal income, which includes wages, interest and government benefits, grew by 0.4 percent last month, slightly faster than the 0.3 percent rise many analysts were anticipating.

At the same time, spending rose by a brisk 0.6 percent, a little more than the 0.5 gain analysts were expecting.

On Wall Street, much of the big stock gains registered Thursday evaporated in the first hour of trading today. The Dow Jones industrial average was off 88 points and the Nasdaq index dropped 63 points.

In July, Americans’ incomes grew by 0.3 percent but their spending rose twice as fast, by 0.6 percent.

Disposable income – what is left after taxes – rose in August for the second straight month by 0.3 percent.

All that spending drove down the personal savings rate – savings as a percentage of after-tax income – to a negative 0.4 percent in August, an all-time monthly low since such record keeping began in 1959. July’s savings rate was revised upward from a negative 0.2 percent to zero.

Still, August’s rate may not provide a clear picture of savings, economists have said. That’s because the calculation doesn’t take into account gains realized from such things as rising stocks and higher real-estate values.

The Federal Reserve has boosted interest rates six times over the last 15 months to slow economic growth and keep inflation under control. The Fed’s rate increases are designed to make borrowing more expensive and cool demand for such big-ticket items as cars and homes.

Given signs of moderating growth, economists believe the Fed won’t boost interest rates at its meeting next week or for the rest of this year.

Today’s report showed that spending on durable goods – cars and other costly manufactured goods expected to last at least three years – grew by 1.6 percent in August, the fastest pace since a 1.7 percent increase in February. In July, spending on durable goods rose 0.7 percent.

Spending on nondurable goods, such as food and fuel, rose 0.2 percent in August, down from a 0.7 percent rise the month before.

Americans’ wages grew by a modest 0.3 percent in August, following a solid 0.5 percent rise in July.

Total income growth last month was dampened in part by the departure of temporary federal government census workers. Analysts also expected sluggish job growth in August to temper income growth for the month.

Copyright ©2000 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Talk to us

More in Local News

FILE - A sign hangs at a Taco Bell on May 23, 2014, in Mount Lebanon, Pa. Declaring a mission to liberate "Taco Tuesday" for all, Taco Bell asked U.S. regulators Tuesday, May 16, 2023, to force Wyoming-based Taco John's to abandon its longstanding claim to the trademark. (AP Photo/Gene J. Puskar, File)
Hepatitis A confirmed in Taco Bell worker in Everett, Lake Stevens

The health department sent out a public alert for diners at two Taco Bells on May 22 or 23.

VOLLI’s Director of Food & Beverage Kevin Aiello outside of the business on Friday, May 19, 2023 in Marysville, Washington. (Olivia Vanni / The Herald)
Coming soon to Marysville: indoor pickleball, games, drinks

“We’re very confident this will be not just a hit, but a smash hit,” says co-owner Allan Jones, who is in the fun industry.

Detectives: Unresponsive baby was exposed to fentanyl at Everett hotel

An 11-month-old boy lost consciousness Tuesday afternoon. Later, the infant and a twin sibling both tested positive for fentanyl.

Cassie Franklin (left) and Nick Harper (right)
Report: No wrongdoing in Everett mayor’s romance with deputy mayor

An attorney hired by the city found no misuse of public funds. Texts between the two last year, however, were not saved on their personal phones.

Firearm discovered by TSA officers at Paine Field Thursday morning, May 11, 2023, during routine X-ray screening at the security checkpoint. (Transportation Security Administration)
3 guns caught by TSA at Paine Field this month — all loaded

Simple travel advice: Unpack before you pack to make sure there’s not a gun in your carry-on.

Heavy traffic northbound on 1-5 in Everett, Washington on August 31, 2022.  (Kevin Clark / The Herald)
To beat the rush this Memorial Day weekend, go early or late

AAA projects busy airports, ferries and roads over the holiday weekend this year, though still below pre-pandemic counts.

Logo for news use featuring the municipality of Snohomish in Snohomish County, Washington. 220118
Troopers: DUI crash leaves 1 in critical condition in Maltby

A drunken driver, 34, was arrested after her pickup rear-ended another truck late Tuesday, injuring a Snohomish man, 28.

Housing Hope CEO Donna Moulton raises her hand in celebration of the groundbreaking of the Housing Hope Madrona Highlands on Tuesday, May 23, 2023 in Edmonds, Washington. (Olivia Vanni / The Herald)
$30M affordable housing project to start construction soon in Edmonds

Once built, dozens of families who are either homeless or in poverty will move in and receive social and work services.

Ashley Morrison, left, and her mother Cindi Morrison. (Photo provided by Cindi Morrison)
Everett’s ‘Oldest Young Cat Lady’ legacy continues after death

On social media, Ashley Morrison, 31, formed a worldwide community to talk about cats and mental health. Her mom wants to keep it going.

Most Read