Consumers spent more in January

03.02.09
By Lewis Green

After six months of cutting back, American consumers increased their spending in January, according to new figures.

The U.S. Commerce Department said people spent 0.6 percent more during the first month of 2009 than they had the previous month, with most of the growth arising from purchases or nondurable goods such as food.

At the same time, this increase did not necessarily mean people were adding to their credit card debt without keeping an eye on their personal finances.

The rate of personal savings as a proportion of disposable income rose to 5 percent in January, which was higher than at any point since 1995, according to the Associated Press.

Since the recession began, some financial experts have been recommending people focus on paying off credit card debt and saving money in case of job loss or a similar event.

However, economist Scott Brown of Raymond James & Associates told Reuters that increasing savings en masse may have some unintentional effects on the economy.

"It is good that people save, but it is not good that everybody saves at the same time. That makes the current downturn more severe and long-lasting," he told the news provider.

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The savings rate also rose in January