Personal spending rose 0.6 percent in May while incomes grew 0.5 percent, the Commerce Department said Friday.
The report shows no slowdown in the spending or earnings of average Americans, even as the Asian financial crisis is beginning to hit some sectors of the economy.
In fact, the Asian crisis is helping American consumers by keeping interest rates and the prices of many goods down. Spending on durable goods, especially cars and trucks, rose 2.9 percent in May as American consumers took advantage of low prices and interest rates.
The numbers matched Wall Street's expectations.
Disposable income also rose 0.5 percent in May. The personal savings rate fell to 3.5 percent, the lowest since 3.3 percent in July 1997.
In April, income, disposable income and spending all increased 0.4 percent.
In May, wages and salaries grew $22.3 billion, proprietors' income rose $4.1 billion, transfer payments rose $3.6 billion, interest income rose $1.9 billion, rental income rose $2.6 billion, and dividend income rose $2.1 billion.
Wages at manufacturing companies fell $100 million after dropping $700 million in April. Wages and salaries in other sectors rose. At the end of the month, the per capita annual income in the United States was $22,744.
More than half of the increase in spending in May was for durable goods, items designed to last three years or more. Durable goods are attractive, because their prices are low, financing costs are low, and consumers are confident about their jobs and incomes. Vehicles were responsible for most of the increase in purchases of durable goods, the government said.
Spending on durable goods increased 2.9 percent in May, the most since July 1997. Spending on nondurable goods rose 0.4 percent and spending on services rose 0.3 percent. Spending on durables accounts for just 12 percent of total personal consumption expenditures, but accounted for 54 percent of May's increase in spending.
Written by Rex Nutting, CBS MarketWatch