According to the Commerce Department, personal income rose 0.5 percent in November, but spending increased slightly more than twice that amount. Though the tally revealed the first negative personal savings rate in more than a year, both gains exceeded analysts' expectations
Much of the rise in spending is attributable to higher gasoline costs. Still, the news was received positively. Since consumer spending accounts for two-thirds of all economic activity, the report boosted optimism that the U.S. may avoid a 2008 recession, despite weakness in other sectors of the economy.
Higher fuel prices aren't going unnoticed in Washington. And in an effort to lessen the "pain at the pump," President Bush signed a comprehensive energy bill this week requiring greater automobile fuel efficiency and increased renewable fuel production.
President Bush signed a sweeping energy bill this week after months of contentious debate by lawmakers. The legislation marks the first increase in federal fuel economy standards since the Arab oil embargo of the 1970's.
The move raises fuel mileage to 35 miles per gallon by 2022 – a 40 percent increase over today's standards. A key bargaining chip during debate on the energy bill involved stripping tax breaks away from domestic oil companies. That section was eventually removed from consideration.
Additional segments of the measure passed this week promote a reduction in America's energy usage and a boost for alternative fuels.
President George W. Bush: "The bill I sign today takes a significant step because it will require fuel producers to use at least 36 billion gallons of biofuel in 2022. This is nearly a fivefold increase over current levels. It will help us diversify our energy supplies and reduce our dependence on oil."
The law sets a high water mark for biofuel production at 36 billion gallons and funnels research dollars towards cellulosic ethanol production.
President George W. Bush: "…we understand the hog growers are getting nervous because the price of corn is up. But we also believe strongly that research will enable us to use wood chips and switchgrass and biomass to be able to develop the ethanol necessary to help us realize the vision outlined in this bill."
The renewable fuel standard received a warm welcome in rural America where farmers have put the final touches on the largest corn harvest since World War II.
Monte Shaw, Exec. Director Iowa RFA: "This was a great day for America's biofuel producers and I have no doubts that we can meet this demand."
Current biofuel production has already surpassed the federal government's mandate of 7.5 billion gallons by 2012. But critics of the 2007 energy bill accuse the federal government of offering corporate welfare for ethanol companies. According to Monte Shaw, Executive Director of the Iowa Renewable Fuels Association, the federal government has made a clear choice for America's energy future.
Monte Shaw, Exec. Director Iowa RFA: "Quote here"