By Vicki Needham - 08/02/11 01:54 PM EDT
With high unemployment plaguing the economic recovery, consumers are opting to save more, with that rate climbing to 5.4 percent, the highest level since September.
High gas and food prices, along with a 9.2 percent jobless rate, are weighing heavy on household budgets, and spending is needed to boost the recovery. Consumer spending accounts for 70 percent of economic activity.
Caution among consumers is reflected in the tepid 1.3 percent growth in the second quarter, after only 0.4 percent growth in the first three months of this year.
For the first six months of the year, growth had its worst performance since the recession ended in June 2009.
Employers added only 18,000 jobs last month, and the numbers might not be much better when the government releases figures for July on Friday.
Federal Reserve Chairman Ben Bernanke and other economists have said that certain temporary factors slowing the recovery could fade in the second half of the year, allowing for a rebound.
But gas prices are still high, about 14 cents higher than a month ago, and manufacturing, which has led the recovery, showed signs of weakness in July.
In a report on Monday, the Institute for Supply Management's index of manufacturing activity fell to 50.9 percent in July from 55.3 percent in June, the lowest since July 2009, a month after the recession officially ended.