US consumer spending falters; wage gains highest since 2008
Credit: Reuters/Lucas Jackson
A woman eats ice cream as she looks at the display in the window of a Gold Standard jewellery store that specializes in purchasing raw gold and silver in New York April 15, 2013.
The Commerce Department said on Friday consumer spending declined 0.2 percent last month as demand for goods tumbled and
services barely rose. Spending had increased by an unrevised 0.5 percent in August.
Economists polled by Reuters had expected consumer spending, which accounts for more than two-thirds of U.S. economic
activity, to increase 0.1 percent in September.
When adjusted for inflation, consumer spending fell 0.2 percent. That was the first drop since April and followed a 0.5
percent rise in August.
The data was included in Thursday's gross domestic product report, which showed the economy expanded at a 3.5 percent
annual rate in the third quarter after growing at a 4.6 percent pace in the second quarter.
The softer consumer spending at the end of the third quarter could add to expectations of slower growth in the final three months of the year. A report on Tuesday showed unexpected weakness in business spending plans for equipment in September.
But with gasoline prices at a near four-year low and faster job growth expected to boost wages, the slowdown in consumer
spending could be temporary.
Income rose 0.2 percent in September after increasing 0.3 percent in the prior month. With income growth outpacing
consumption, savings jumped to $732.2 billion, the highest level since December 2012, from $702 billion in August.
That lifted the saving rate to 5.6 percent from 5.4 percent in August.
Weak consumption kept a lid on inflation last month. A price index for consumer spending edged up 0.1 percent after slipping 0.1 percent in August. In the 12 months through September, the personal consumption expenditures (PCE) price index rose 1.4 percent for a second straight month.
Excluding food and energy, prices rose 0.1 percent for a third consecutive month. The so-called core PCE price index
increased 1.5 percent in the 12 months through September.
Both price measures continue to run below the U.S. central bank's 2 percent inflation target.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
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