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To: lorne who wrote (22511)	11/2/1998 6:17:00 PM
From: lorne	Respond to of 116762

U.S. Savings Rate Hits Lowest Level Since 1930s 11:33 a.m. Nov 02, 1998 Eastern WASHINGTON (Reuters) - The savings rate of U.S. consumers in September plunged to a negative level for the first time in 65 years as Americans spent heartily despite only modest growth in their paychecks, the Commerce Department said Monday. U.S. personal spending jumped 0.5 percent to a seasonally adjusted $5.873 trillion following a revised gain of 0.4 percent in August. Consumers were willing to open their wallets in September even though their incomes rose by a meager 0.2 percent to $7.174 trillion following a revised 0.4 percent rise in August. September's income gain was the smallest monthly increase since a matching 0.2 percent increase in April 1997. The savings rate -- the portion of after-tax dollars left over after spending -- fell to -0.2 percent, the first negative monthly savings rate since the department began reporting the figures on a monthly basis in 1959. Prior to that, figures were calculated quarterly. The last time there was a negative savings rate was in 1933, when the rate was -2.1 percent, a department official said. The savings rate has been falling steadily for years, but a change by the Commerce Department in July in how it calculates the rate has made it appear even smaller. The new method defines consumers' after-tax income more narrowly and now excludes certain types of mutual-fund distributions that made income appear stronger under the old measure. The gain in spending in September matched forecasts by U.S. economists in a Reuters survey, though the income gain exceeded the 0.1 percent rise that was projected. Analysts have been impressed by consumers' willingness to spend despite financial turmoil in the United States and around the world that has dented confidence in the economy's health.