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Inflation-adjusted consumer spending rose 0.1% last month.

The report from the Bureau of Economic Analysis showed inflation-adjusted spending on services rose 0.2%, helped by a pickup in outlays on transportation and recreation. Spending on merchandise fell 0.2%, the first drop since March, as purchases of motor vehicles and home furnishings declined.

While wages and salaries growth accelerated, real disposable income declined by 0.2% for a second month.

“Annual revisions to income and spending data suggest households this year have been spending less and saving more than previously believed,” Bloomberg economists wrote. “That’s characteristic of precautionary saving as households reassess their consumption habits.”

A recent Fed study showed that after adjusting for inflation, the bottom 80% of houses by income have run out of extra savings and now have less cash on hand than when the pandemic began.

That’s not a good trend with higher interest rates leaving consumers with higher monthly debt payments.