WASHINGTON - U.S. personal spending rose in July at twice the pace of incomes as people borrowed to make purchases and the savings rate fell to a record low, the government reported.
Spending on goods and services rose 0.6% last month, the largest increase since February, as car and other retail sales increased. In June, spending rose 0.4%, the Commerce Department said. Incomes grew 0.3% in July after a 0.4% rise the month before.
As spending exceeded income growth, the savings rate fell to a minus 0.2% in July - the lowest since the government started keeping records in 1959 - from 0.1% in June.
That means people are financing more of their purchases with credit cards or home equity loans. Consumer borrowing rose $12 billion in June after a $14.2 billion May increase, the Fed recently reported. This suggests further slowing in the economy could cause spending to cool along with it.