Consumer spending, earnings dropped last year

For a second-straight year, U.S. consumers spent less and earned less in 2010, according to a new report.

The Labor Department indicates that consumers parted with their money much less frequently for a variety of items last year, cutting back on groceries, entertainment and restaurants. They were also less likely to give money to charitable organizations. What they did spend more on, however, was gasoline and health insurance.

Overall, consumer spending dropped 2 percent last year compared to 2009. It marks just the second time the rate of purchases diminished on a yearly basis since the statistic began to be tracked 27 years ago.

According to The Associated Press, economists predicted spending would increase due to Social Security tax cuts, but these were likely offset by a rise in global oil prices.

Meanwhile, in the face of high unemployment, incomes also fell in 2010, dropping 0.6 percent. In 2009, earnings diminished by 1.1 percent.

In tough economic times, it can be increasingly important for consumers to be watchful of their credit histories. Discrepancies on a report can lower a credit score, making it more difficult for consumers to borrow at a low rate of interest.