SAVINGS RATE UP, CONFIDENCE DOWN

Consumer spending increased thanks to the rebate checks but there was also a rise in the savings rate. From Bloomberg:

Adjusted for inflation, spending rose 0.4 percent, the biggest gain since December 2006.

Because the increase in spending was smaller than the gain in incomes, the savings rate jumped to 5 percent, the highest since March 1995, from 0.4 percent in April.

I think people are saving more because they are worried about the future. Here's a report from Reuters via Atrios:

Consumer confidence fell more than expected in June, hitting another 28-year low as surging prices and mounting job losses contributed to a bleak outlook, according to a survey released on Friday.

The Surveys of Consumers said the final June reading for its index of confidence fell to 56.4 from May's 59.8. The report said the pace of consumer spending is likely to sink at least through the start of 2009.

The June reading is the lowest since 51.7 in May 1980, which was also the lowest reading ever. The index dates back to 1952, though the survey has been conducted since 1946.