a rising cost of living is forcing americans to spend more carefully the numbers consumer spending rose a modest 04 in august as americans appeared to pocket savings from lower gas prices instead of using the extra cash on other goods and services taking high inflation into account spending rose a scant 01 last month the lackluster increase suggests people are minding their money as the economy slows and higher prices raise their cost of living economists polled by the wall street journal had forecast a 03 increase in spending lower gas prices have given americans some relief from high inflation but they are still suffering from financial distress the rate of consumer inflation using the socalled pce price index has climbed 62 in the past year the better known consumer price index has jumped an even sharper 83 in the same span consumer spending drives as much as 70 of us economic activity spending has softened up because of high inflation and now rising interest rates are also making americans think twice about how much to spend incomes rose 03 in the month the government said wages havent kept up with inflation over the past year however putting a further strain on households big picture consumers are carrying the torch for the economy but rising interest rates threaten to extinguish the flame the federal reserve is rushing to raise the cost of borrowing to try to stamp out the highest inflation in 40 years but in doing so the central bank risks grinding the economy to a half and spawning the second recession in four years market reaction the dow jones industrial average and sp 500 were set to open higher in friday trades stocks have tumbled over the past two weeks in response to rising interest rates and the growing threat of recession