Fred Harteis News Articles - The government’s “cash for clunkers” program jump-started personal spending in August as car buyers took advantage of taxpayer-financed rebates, the government reported on Thursday.
The 1.3 percent spike in spending was the largest in nearly eight years, but economists said it was not the foundation for any long-term rebound in the consumer sector. The government’s $3 billion clunkers program has ended, and automakers are bracing for a drop in September sales from a month earlier.
With consumers still worried about losing their jobs and the value of their homes and investments, economists said the surge in spending was probably a one-hit wonder. Still, it was the fourth consecutive month of growth in spending.
“I wouldn’t expect it to continue,” said Alan Levenson, chief economist at T. Rowe Price.
In its monthly snapshot of spending and wages, the Commerce Department also reported that incomes inched up 0.2 percent in August, and that private wages and salaries increased slightly.
The personal savings rate dipped to 3 percent from as high as 5.9 percent in May as consumers spent more of their disposable income, most likely on new cars and trucks.
In a troubling sign for the job market, the Labor Department said in a separate report that first-time claims for unemployment insurance rose 17,000 to a seasonally adjusted 551,000 last week.
The government is releasing its monthly report on unemployment Friday, and economists expect that the unemployment rate will rise to 9.8 percent from 9.7 percent, already the highest levels in 26 years.
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Source: Nytimes.com
About Fred Harteis: Fred Harteis leads Harteis International. Fred Harteis has a background in agriculture and has created many successful business ventures.

