Americans spending less, saving more

Americans cut back on spending by 1% in December, and increased personal savings by 3.6 %, in response to concerns about job security and economic stability, according to a Department of Commerce report released today. Spending fell $102.4 billion, a steeper drop than the $77.8 billion loss in November. Personal income fell $23.5 billion last month, The personal savings rate has been steadily increasing since the 0.8 % growth rate in August, the report showed. The accelerating contraction of the manufacturing industry could be behind the drop in spending and personal income, according to the Institute for Supply Management. The Washington-based group keeps track of factory activity and creates a factory index based on productivity. Although the factory index for last month rose to 35.6 from a December reading of 32.9, the manufacturing market is still suffering; any number below 50 indicates contraction.