By Vicki Needham - 08/03/10 02:48 PM EDT
Federal Reserve Chairman Ben Bernanke, along with other economists, have said that while the economy is recovering the future is uncertain and it could likely slow in the second half of the year.
In a Monday speech, Bernanke said he expected consumer spending to rise along with incomes.
The weak job and housing markets are shaking consumer confidence, so despite increases in incomes in April and May, people opted to save rather than spend. Consumer spending is responsible for about 70 percent of the economy, and without it the recovery is expected to wobble ahead.
The personal savings rate increased to 6.4 percent of after-tax incomes in June, the highest level in almost a year. In 2007, before the recession, the average savings rate was only 2.1 percent.
The economy grew 2.4 percent in the second quarter, according to a government report last week, down from 3.7 percent in the first three months of the year.
Consumer spending rose at an annual rate of only 1.6 percent in the second quarter, contributing to the slowdown in the economic recovery.