(CNN) — Americans are earning more income but not spending their extra cash, according to new data from the U.S. Bureau of Economic Analysis.
Personal income rose by .4% in May, marking the fifth straight month of increase. Not only that, but incomes are rising faster than inflation–an encouraging sign that people are gaining more buying power.
Disposable income is up 1.9 percent from a year ago. This is an important development because consumer spending drives the bulk of the U.S. economy. But here’s the catch: consumers haven’t been going out and spending. Instead, they’re choosing to sock that money away.
After accounting for mildly higher prices, consumer spending has actually fallen for two months in a row. In May, Americans cut back on eating out, going to the movies and buying clothes. They spent less on necessities like groceries and utilities.
Meanwhile, health care spending has fallen considerably since the beginning of the year, and has now been flat for two months in a row.
The few exceptions to these trends include spending on housing, gasoline and cars, which are rising. As of May, Americans were saving about 4.8 percent of their monthly income.