Monday, August 06, 2012While incomes in the U.S. rose slightly in June 2012, a new report shows that consumer spending stagnated, suggesting Americans are using their earnings to increase their savings and pay down household debt. This trend toward saving more and spending less could have a negative impact on the growth of the economy.
The report from BMO Financial and Harris Bank suggests that the trend toward saving and debt reduction will continue. This could put downward pressure on domestic growth for the remainder of 2012.
The report also reveals that:
- Americans are now taking on less debt than they did a decade ago.
- Consumption, which accounts for more than two-thirds of domestic economic activity, was unchanged in June, falling short of economists' predicted 0.1 percent increase.
- Income rose 0.5 percent for the month, pushing the nation's savings rate to 4.4 percent - its highest level in a year.
- The number of jobs created from April to June this year was about one-third of those created between January and March 2012.
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