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Consumer Spending Down

Consumer Spending Down 

The commerce department reported that personal consumption spending dropped by 1 percent in December, slightly higher than the 0.9 percent expected. In the mist of massive layoffs, incomes fell for the straight third month. Meanwhile the possibility of further job cuts has prompted many to increase their savings. Savings rate rose by 3.6 percent.

For the year consumer spending rose by 3.6 percent, the smallest annual increase since 1961, and the weakest gain since a 3.2 percent in 2003. Two other reports released Monday showed the persistent recessionary condition in the construction and manufacturing sectors.  For the year construction activity fell by 5.1 percent.

SF Examiner-02/03/2009