Business

Consumer spending falls for 6th month

WASHINGTON — Consumer spending fell for a record sixth straight month during December as recession-battered households, worried by surging layoffs, boosted their savings rates to the highest level since May.

Adding to those layoffs Monday was Cincinnati-based Macy's Inc., which announced Monday that it will cut 7,000 jobs, almost 4 percent of its workforce, reduce its contributions to its employees' retirement funds and slash its dividend to preserve cash amid a severe pullback in consumer spending.

Macy's said the cuts, which include some unfilled jobs and 1,900 positions being eliminated in a restructuring now under way nationwide, will come at corporate offices, stores and other locations. The company employs 180,000 people.

The chain has a location in Lexington at Fayette Mall. The effect, if any, on that outlet was not disclosed.

Monday's moves come on top of an announcement last month that Macy's would close 11 stores, affecting 960 employees.

Department stores have been especially hard-hit by the poor economy as shoppers cut spending and turn to discount stores.

Economists expect consumer spending, which accounts for the largest portion of total economic activity, to remain weak this year, prolonging an already painful recession.

The Commerce Department reported Monday that personal consumption spending dropped by 1 percent during December. That was slightly worse than the 0.9 percent decline economists expected. The government also lowered its estimate to show spending fell 0.8 percent rather than 0.6 percent during November. For the year, consumer spending rose by 3.6 percent, the smallest annual increase since 1961.

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