U.S. data shows promise

By Bernard Orr and Steve Orlofsky

NEW YORK (Reuters) - Reports on Friday showing rising consumer confidence and personal income in the United States suggested the worst recession in seven decades may be abating, but fear still lingered that the economy will take time to bounce back as the U.S. savings rate hit a record.

Data showed that while U.S. consumer spending and income both rose in May as government stimulus money spread through the economy, much of it was being stashed away.

U.S. savings jumped to a record annual rate of $768.8 billion (465.8 billion pounds), the highest since records began in 1959, and the saving rate climbed to a 15-year high of 6.9 percent.

"We need people to spend money in order to keep the economy humming," said Joe Kinahan, chief derivatives strategist at online brokerage thinkorswim Group in Chicago. "The consumer has been the stalwart of the economy at this point, and we still need them to be."

The Dow Jones industrial average .DJI fell 34.01 points, or 0.40 percent, to close at 8,438.39. The Standard & Poor's 500 Index .SPX shed 1.36 points, or 0.15 percent, to 918.90. The Nasdaq Composite Index .IXIC gained 8.68 points, or 0.47 percent, to 1,838.22.

The dollar .DXY and oil slipped, while the U.S. government bond prices rose on Friday.

U.S. consumer spending rose last month for the first time since February as stimulus money pushed incomes up sharply, the Commerce Department said on Friday, supporting the view that the nation was close to pulling out of recession.

Consumer spending, which accounts for over 70 percent of U.S. economic activity, rose 0.3 percent in May, while April's reading was revised up to flat from slightly negative.