Stimulus Checks Boost Spending
Consumer spending rose by a nine-month high of 0.4 percent in May, with $48 billion in federal tax rebate checks lifting personal income and savings, the Commerce Department reported this week.
At the same time, personal income rose by 1.9 percent, up from 0.3 percent in April, while the personal savings rate increased by 5 percent, the highest reading since March 1995, the report said.
Yet excluding gains from the tax rebate checks, which were issued last month as part of a federal economic stimulus plan, disposable income adjusted for inflation remained flat.
Gains in wages and salaries, which grew by 0.3 percent, were also offset by a 0.4 percent increase in inflation, the report said.