IBJNews

September consumer spending weakens while incomes dip

Back to TopCommentsE-mailPrintBookmark and Share

Americans slowed their spending in September to the weakest pace in three months and their incomes fell for the first time in 14 months.

Personal spending rose at an annual rate of 0.2 percent in September, the Commerce Department said Monday. That's below the 0.5-percent gains recorded in July and August.

Incomes fell 0.1 percent in September, following a 0.4-percent rise in August that had been pushed higher by the return of extended unemployment benefits.

The weak growth in spending and incomes underscored how fragile the economy remains. Consumers facing high unemployment and slow job growth remain reluctant to spend.

The drop in incomes was the first decline since incomes fell 0.3 percent in July 2009. The August gain had been skewed by the reinstatement of an extended unemployment benefits program, which had temporarily lapsed in July after Republicans had blocked an extension.

Consumer spending is watched closely because it accounts for 70 percent of total economic activity.

The government reported Friday that the economy grew at an annual rate of 2 percent in the July-September quarter. That's only slightly better than 1.7-percent growth in the April-June quarter.

Many economists believe that growth in the current quarter will be little changed from the third quarter.

Consumer spending had helped boost third-quarter growth. It was the best showing since a 4.1-percent rise in consumer spending at the end of 2006, before a severe recession hit.

However, Monday's report suggested the strength occurred in July and August and that spending slowed considerably in September.

The savings rate fell to 5.3 percent in September, the lowest rate since August 2009. But it is still well above the 2.1-percent average savings rate for all of 2007.

An inflation gauge tied to consumer spending rose a slight 0.1 percent in September and was flat after excluding volatile food and energy.

In response to the weak economy, the Federal Reserve this week is expected to announce a program to buy Treasury bonds. The effort is designed to drive interest rates lower and spur economic activity.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. "This was a very localized, Indiana issue," he said. As in, Indiana failed to expand Medicaid to cover its poor citizens resulting in the loss of essential medical services, including this EMS company. Well done, Indiana GOP. Here are the real death panels: GOP state governments who refuse to expand Medicaid for political reasons.

  2. In the "one for all, all for none" socialist doctrine the sick die...this plus obama"care" equates to caucasian genocide plus pushed flight to cities thus further eroding the conservative base and the continualed spiral toward complete liberal/progressive/marxist America.

  3. There is a simple reason why WISH is not reporting on this story. LIN has others stations in different markets that are affiliated with CBS. Reporting about CBS blindsiding WISH/LIN due to CBS's greed and bullying tatics would risk any future negoations LIN will have with CBS in other markets.

  4. My best always! Dave Wilson

  5. How did Columbus, Ohio pull off a car share service without a single dollar of public subsidies? They must not have a mayor who is on the take like Indianapolis. Daimler Benz offers Columbus residents their Smart Cars on a market-driven basis: "This has some neat features. Cars don’t have to be picked up and dropped off at fixed points. You find one with your smart phone based on GPS, and drop it off anywhere in the service area you can find a spot – even at a meter. These cars aren’t required to feed the meter so you get free on street parking while using them. I was told this system was put in place on a market basis without subsidies – and that the vendor actually pays the city for the use of the meters." http://www.urbanophile.com/2014/05/26/checking-in-on-columbus/

ADVERTISEMENT