Consumer spending increases, savings rate drops in July

Americans steered away from credit and focused on rebuilding their savings during the first half of the year, but new reports show that consumer spending was up in July. Though it was minimal, spending increased 0.4 percent, according to new statistics from the Commerce Department. This breaks a three-month stretch of nearly no increase or decrease in spending.

The Hill, a political news blog, says that savings dropped slightly in July to 5.9 percent. In June, the savings rate hovered around 6.2 percent. Analysts say that much of this can be attributed to the high unemployment rate and Americans’ efforts to pay off their credit card debt.

Although there was a drop in July, this savings rate is still nearly three times higher than it was at the beginning of the 2008 recession, according to The Hill. Analysts say that the economy may in fact be on the road to recovery, however, as 70 percent of consumer spending accounts for financial growth.

Many Americans have been struggling with credit card debt since the beginning of the financial meltdown more than two years ago. Consolidation is an option for those finding difficulty making monthly payments.