Americans stashed more money away last month, pulling back on discretionary spending amid a cloudier economic outlook.

The saving rate rose for a third month to 3.4% in December, the highest level in seven months, according to Commerce Department data out Friday. Last month’s increase from 2.9% in November marked the biggest jump since July 2021, the report showed.

Savings are creeping back up after steady declines in the second part of 2021 and in 2022 as the economy reopened and Americans started spending again on services - including restaurants and travel.

“The saving rate typically falls late in economic expansions as consumers borrow to sustain spending, then rises as they lose access to credit and turn more cautious on discretionary spending,” Comerica Bank Chief Economist Bill Adams wrote in a note.

Friday’s report also showed real personal spending continued to retreat last month. The decline was led mainly by goods categories, while services spending stagnated.

“Prospects for consumer spending are cloudy,” Lydia Boussour, senior economist at EY Parthenon, said in a note. “Eroded personal savings and increased reliance on credit point to weak consumer spending this winter.”

Today’s rate remains well below the record highs at the beginning of the pandemic, when millions worked from home and received Covid-relief funds.