Report shows consumer spending and personal income increase in May
Written on June 26, 2010 – 5:38 am | by Alicia Ross
Report shows that both consumer spending and personal income increased in May
Consumer spending accounts for nearly 70 percent of the economy and is often used to determine the strength of economic recovery. After disappointing results in April, May’s rate suggests that Americans are showing slightly more confidence in both their personal finances and the economy.
The report also reveals that personal income increased by 0.4 percent, aided in part by slow job growth. Though most of the 431,000 jobs that were added to the economy last month were the result of temporary Census positions, the private sector added 41,000 permanent positions. To add to the positive news, personal savings reached its highest rate in nearly eight months, growing at a 4 percent rate in contrast to the 3.8 percent increase seen in April. Savings grew to $454.3 billion in May alone.
Despite the positive news, Americans are not out of the woods yet. Foreclosures continue to rise as more homeowners are unable to continue payments on their mortgage loans and others stop making payments on underwater properties. Additionally, mortgage professionals predict that foreclosures may continue to rise, as tightened restrictions and credit standards are making it more difficult for distressed Americans to obtain permanent mortgage modification loans.
According to a recent report, 75 percent of Americans that receive a loan modification will re-default within a 12-month period.
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