Consumer spending, propelled by the wildly popular Cash for Clunkers auto sales program, shot up in August by the largest amount in nearly eight years even though personal incomes continued to lag.
The Commerce Department says that consumer spending rose 1.3 percent in August, even better than the 1.1 percent gain that had been expected. Incomes continued to lag, edging up 0.2 percent in August, the same as the July increase.
The big jump in consumer spending, which accounts for 70 percent of total economic activity, is a good indication that the economy was returning to positive growth this summer. But economists are worried that any rebound from the recession could falter if income growth does not improve.