Consumer Spending, Personal Income Increase

U.S. consumers slightly increased their spending last month, and economists said the rise was largely driven by the economic stimulus package that boosted the income of Americans.

The Commerce Department reported today that consumer spending rose 0.3 percent in May, compared with the month before. It's the first gain in spending since February and another possible sign that efforts to ease the recession could be paying off. Taking inflation into account, however, the spending rate rose by only 0.2 percent.

The increase is in line with a 1.4 percent jump in personal income, the strongest gain in a year, the department said. The $787 billion stimulus package, which includes expanded unemployment benefits and lower personal taxes, was largely responsible for the higher consumer spending.

But not all Americans are spending the stimulus money. Personal saving as a percentage of disposable income increased to 6.9 percent, the highest level since December 1993. The personal saving level jumped to a record annual rate of $768.8 billion, the highest since records began in 1959.

Meanwhile, economists continue to keep a close eye on the inflation rate amid massive government spending designed to pull the economy out of recession.