Consumer Spending Spree In July

The Commerce Department reported US consumer spending was up 0.8% in July 2011 -- or 0.5% when adjusted for inflation -- thanks in large part to 10% drop in gas prices and personal saving rate drop from 5.5% to 5.0%. This is starting the third quarter off to a good start, but a moribund August, recent Federal Reserve surveys of manufacturing activity showing downward numbers, and an East Coast hurricane named Irene combine to offset this initial welcome news. Personal income rose 0.3%, but after adjusting for inflation, actually dropped 0.1% -- the first decline since September 2010.