WASHINGTON, DC, USA

US consumers earned less and spent less for a second straight year in 2010. The Government report released yesterday offered a deeper look at how Americans have adjusted their spending after the worst recession since the Great Depression.

People spent less last year on food, cut back on entertainment and eating out at restaurants and gave less to charity. At the same time, they paid more for gas and health care — trends that have continued this year.

Total spending by consumers fell two per cent last year, according to the Labour Department’s annual survey of consumer behaviour. It’s only the second decrease since the Government began the survey in 1984. The first came in 2009.

Incomes declined 0.6 per cent in 2010, after a 1.1 per cent drop in 2009.

This year, consumer spending and income have increased only modestly. High unemployment, meagre pay increases and a spike in gas prices have slowed both.

Weak consumer spending has held back the overall economy, which barely grew in the first half of the year. Consumer spending accounts for 70 per cent of growth.

Economists had hoped a Social Security tax cut would boost spending this year. It gave most families an extra US$1,000 to US$2,000 in take-home pay. However, that gain was offset by a sharp spike in global oil prices, which drove gasoline prices higher beginning in January.

The average price for a gallon of gas peaked in early May at nearly US$4 — almost a dollar more than the price per gallon at the beginning of the year.

Prices have come down a little since then but are still high. Yesterday, the average price per gallon was US$3.48, according to AAA.

A separate report yesterday showed that the cost of employer-sponsored health insurance surged this year. Annual premiums for family coverage climbed nine per cent and surpassed US$15,000 for the first time, according to the report released by the Kaiser Family Foundation and the Health Research and Education Trust. The 2010 increase for family coverage had been three per cent.

Average household income before taxes fell to US$62,481 in 2010, according to the report. That’s down from US$62,857 in 2009 and US$63,563 in 2008.

Average annual expenditures dropped to US$48,109. The average American household spent US$49,067 in 2009 and US$50,486 in 2008.

AP

CALIFORNIA, USA — This August 26, 2011 file photo shows shoppers unloading their items at Costco in Mountain View, California. Consumers earned less and spent less for a second straight year in 2010. The Government data show how Americans are struggling after the worst recession since the Great Depression. (Photo: AP)