WASHINGTON – U.S. consumers cut back on their spending in September, even as their incomes showed moderate growth, according to a government report released on Friday that renewed worries about the resilience of the consumer-led economic recovery.
The Commerce Department said personal spending, one of the main drivers of economic growth, fell by 0.4 percent in September, its first drop since November 2001. Personal income, however, grew by 0.4 percent in the month.
Economists closely track consumer spending, which accounts for two-thirds of U.S. economic activity. The household sector has been the bulwark for the economy amid its current shaky recovery from last year's recession. While business spending has continued to lag, consumers have maintained a steady pace of buying that has kept the economy from lurching back into a downturn.
But in a sign that consumers are becoming increasingly cautious, the personal saving rate — the percentage of personal income left over after taxes and spending — rose to 4.2 percent from 3.4 percent in August. That's the highest rate since June.
August income growth was revised to reflect a 0.3 percent advance instead of the 0.4 percent gain previously reported. Spending in August was revised upward, to a 0.4 percent from the initially reported 0.3 percent.
The September figures differed from Wall Street analysts' expectations. In a poll of economists by Reuters, the average forecast was for income to post a 0.5 percent increase and spending to fall by a smaller 0.2 percent.
The income and spending data are not expected to have much market impact, having already been incorporated in Thursday's initial estimate of third quarter gross domestic product that showed the economy grew at a 3.1 percent annual rate. Analysts are also focused on the October payrolls — released at the same time as the personal income and spending data — which showed a decline of 5,000 jobs.
Elsewhere in the report, a widely-watched gauge of inflation pressures increased at a slow rate. The price index for personal consumption spending rose by 0.2 percent in September. The index for spending outside of food and energy was also up by 0.2 percent.