Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, July 31, 1990                   TAG: 9007310367
SECTION: BUSINESS                    PAGE: A-5   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

SPENDING KICKS IN

"This seems to indicate the consumer is not dead," said Mark Zandi, an economist with Regional Financial Associates in West Chester, Pa. "As long as the consumer hangs in there, I believe we will avoid a recession." Economists generally count consumer spending as two-thirds of the nation's economic activity.

The Commerce Department said consumer spending totaled a seasonally adjusted annual rate of $3.64 trillion, the biggest jump since a 1 percent gain in January.

"This does not indicate we're going into an economic recession," agreed Sung Won Sohn, chief economist with the Norwest Corp. in Minneapolis. He noted that consumer spending accounts for two-thirds of U.S. economic activity.

Consumer spending had been a source of concern in recent months. It rose just 0.2 percent in February and April and 0.3 percent in March but was flat in May.

The Commerce Department also said personal incomes rose 0.4 percent to a seasonally adjusted annual rate of $4.64 trillion in June. That's after 0.3 percent gains in April and May.

But the higher spending level resulted in a drop in savings rate - savings as a percentage of disposable income - to 4.9 percent. It had been 5.4 percent in May and 5.1 percent in April.

A higher savings rate means less dependence on foreign capital because funds would be available at home for business investment.

Personal consumption rose $34.5 billion, including a $9.6 billion gain in spending on items expected to last more than three years. This included a robust $6.1 billion rebound in heretofore sluggish automobile sales.