Accessibility links

Americans Spending More Despite Layoffs

<!-- IMAGE -->

Americans are starting to spend more money, helping to boost a struggling U.S. economy, even though concerns about job losses linger.

The U.S. Commerce Department said Thursday consumer spending rose at its fastest pace in nearly eight years, jumping 1.3 percent in August.

But the report also found reasons for concern.

U.S. incomes failed to keep pace with spending, rising only two-tenths of a percent in August, while the savings rate also fell.

At the same time, the U.S. Labor Department reported job losses appear to be escalating.

Thursday's Labor Department report showed the number of Americans filing first-time claims for jobless benefits rose for the first time in five weeks.

Initial claims increased by 17,000 to 551,000 last week.

The Labor Department issues its September jobs report Friday. It's August report said the U.S. unemployment rate hit a 26-year high of 9.7 percent.

The combination of increased spending and unsteady unemployment situation has some economists worried.

Consumer spending accounts for more than two-thirds of all U.S. economic activity. But with incomes rising at a slow pace and many consumers still at risk of losing their jobs there are concerns about the ability of Americans to pay their bills.

A banking industry trade group said Thursday the number of U.S. consumers making late payments, or failing to make payments, on loans and credit cards is on the rise.

The American Bankers Association said the number of payments that were at least 30 days late rose almost 3.4 percent in the April through June period.

One report Thursday did provide some encouraging news about the job market.

A private research firm said the number of planned layoffs at U.S. companies decreased 13 percent from August to September.