Consumer Spending Sets Record Jump

Consumer spending sees its biggest gain in nearly eight years -- but personal income still lags.

Author:
Jeanine Poggi
Publish date:
Oct 1, 2009 10:47 AM EDT

Consumer spending sees its biggest gain in nearly eight years -- but personal income still lags.

(Stock prices added.)

WASHINGTON (

) -- Consumer spending saw its biggest gain in nearly eight years in August.

The Commerce Department announced on Thursday that personal spending jumped 1.3% during the month, surpassing the 1.1% increase economists expected.

Doug Roberts, chief investment strategist for Channel Capital Research, said much of the boost was due to the cash-for-clunkers program. "This is a government-driven recovery and I don't think any of these programs will ultimately be a long-term solution," he says.

Personal incomes continued to be soft, inching up just 0.2%, the same as July's increase.

Consumer spending accounts for 70% of total economic activity.

Despite the uptick in spending, retail shares were in the red Thursday morning, with the S&P Retail Index off 1% to 373.64.

One of the biggest decliners was

Saks

(SKS)

, which sank 4.5% to $6.52 after it was downgraded to neutral from overweight by J.P. Morgan.

American Eagle Outfitters

(AEO) - Get Free Report

sank 3.5% to $16.28,

Amazon.com

(AMZN) - Get Free Report