Spending Goes Up As Personal Incomes Go Down

This might turn out to be a problem: A new report indicates Americans earned less money in August than they did in July, but that spending still went up. It’s the first time income has taken a dip in two years.

CNNMoney looks at government data released Friday that shows personal incomes falling by 0.1% last month, whereas personal spending still seems to be slowly on the rise with an 0.2% uptick. In the long run, these patterns are likely to put a damper on that willingness to spend as prices rise for certain things like gas and food.

And when consumer spending is down, the rest of the economy suffers. The dollars you plunk down for goods and services accounts for around 70% of total U.S. economic activity.

The decline in personal income is the result of a tough job environment, including high unemployment and a lack of job growth, as well as existing salaries feeling the squeeze as employers tighten their belts.

Personal income falls, spending ticks up in August [CNNMoney

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