Consumer Spending Rises 0.9% in August

WASHINGTON —  Americans flocked to automobile showrooms in August and overall spending increased more rapidly than it had in six months. The surge was more than twice the increase in income, the government reported Friday.

The Commerce Department said income rose 0.4% in August, the seventh straight increase, while spending jumped 0.9%--the largest gain since 1.3% in February.

Consumer spending, the largest force driving economic expansion, was up for the fourth straight month and six of the last seven.

Although the rise was more than many analysts had predicted, they noted it was in line with recent data suggesting there is still considerable strength in the economy.

“We still have good momentum from spending,” said economist Carl Palash of MCM Moneywatch in New York. “But the income growth points to moderate consumption ahead.”

The government previously reported that car and truck sales surged in August, as auto makers restarted assembly lines that had been shut down for part of July to retool for the 1995 models.

The Commerce Department also reported Friday that disposable income--income after taxes--rose 0.5% in August.

The combination of income and spending meant that Americans’ savings rate--savings as a percentage of disposable income--fell to 3.8% in August from 4.2% the previous month.

Analysts said the new data is unlikely to affect the Federal Reserve Board’s timetable for increasing short-term interest rates. Most expect the Fed to boost rates for the sixth time this year by mid-November.

Personal Spending

Trillions of dollars, seasonally adjusted annual rate:

August 1994: 4.67

Source: Commerce Department

Personal Income

Trillions of dollars, seasonally adjusted annual rate:

August 1994: 5.73