WASHINGTON, Feb. 2 (Xinhua) -- As incomes decline, Americans increasingly are reining in spending and instead saving more.

The U.S. personal income, the fuel for future spending, declined for the third month in December. The 0.2 percent decline came after a 0.4 percent drop in the previous month, the Commerce Department reported on Monday.

The disposable personal income of Americans, or after-tax income, was down by 0.2 percent in December after having declined 0.3 percent in November.

Meanwhile, U.S. consumer spending fell by 1.0 percent in December 2008, marking an unprecedented sixth consecutivemonthly decline.

The 1.0 percent drop followed decreases of 0.8 percent in November and 1.1 percent in October.

According to the report, consumer spending on durable goods, items expected to last at least three years such as cars and appliances, plunged by 1.3 percent in December, reversing the 0.4 percent rise in the previous month.

Consumers cut their spending on nondurables such as food and clothes by 3.5 percent, steeper than the 2.7 percent drop in November. Spending on services edged up by 0.2 percent, slightly better than the flat showing in November.

Consumer spending accounts for two-thirds of overall economic activity and is a major force pushing the economy to grow.

The report also indicated that the personal saving rate, personal saving as a percentage of disposable personal income, climbed to 3.6 percent in December from 2.8 percent in November.

For all of last year, the personal saving rate averaged 1.7 percent, nearly three times the 0.6 percent rate for all of 2007.

The report came after government data showed that the economy shrank at an annual rate of 3.8 percent in the final quarter of last year, the biggest drop in 26 years.
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