AlQa'dah 2, 1432, Sep 30, 2011, SPA-- Americans' incomes fell for the first time in almost two years in August, and consumers tapped their savings to maintain spending, according to a government report Friday that showed the impact of the weak jobs market. The Commerce Department said consumer spending rose 0.2 percent, in line with economist expectations, after jumping 0.7 percent in July. However, when adjusted for inflation, spending was unchanged in August after rising 0.4 percent the previous month. Consumer spending accounts for about 70 percent of U.S. economic activity. Income fell 0.1 percent, the first decline since October 2009, with wages and salaries dropping $12.2 billion after increasing $23.8 billion in July. Economists had expected income to rise 0.1 percent. Growth in consumer spending slowed sharply to a 0.7 percent annual rate in the second quarter after advancing 2.1 percent in the first three months of the year. Overall economic growth rose at a 1.3 percent rate in the second quarter after expanding only 0.4 percent in the January-March period. In August, disposable income was unchanged, but when adjusted for inflation, it fell 0.3 percent, the biggest decline since October 2009. With disposable income weak, savings fell to an annual rate of $519.3 billion the smallest since December 2009, from $550.5 billion in July. The savings rate fell to 4.5 percent, also the lowest since December 2009. The report showed a moderation in inflation pressures. The personal consumption expenditures price (PCE) index rose 0.2 percent after increasing 0.4 percent in July. Compared to August 2010, the index was up 2.9 percent, the biggest 12-month increase since October 2008. The core PCE index-which excludes volatile energy and food costs-rose 0.1 percent n August after gaining 0.2 percent the previous month. The core index, which is closely watched by Federal Reserve officials, increased 1.6 percent in over the past 12 months.
