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Consumer spending, incomes rise

Thursday, Sept. 1, 2005 | 9:28 a.m.

WASHINGTON -- Americans spent freely for a second straight month in July, driving their personal savings rate down to the lowest level on record, the government reported today.

The Commerce Department said that consumer spending rose 1 percent, matching the strong June increase. Both months saw spending driven higher as consumers flocked to auto showrooms to take advantage of attractive incentive offers automakers were using to reduce a backlog of unsold cars.

Incomes rose a smaller 0.3 percent in July, down from a 0.5 percent gain in June. The combination of a surge in spending and slower income growth sent the personal savings falling to a minus 0.6 percent, the lowest level since the government began keeping these records in 1959.

Reports from the nation's big chain stores indicated that consumer sales remained strong in August despite soaring gas prices.

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