WASHINGTON – U.S. consumers kept a tight grip on their wallets in October, holding spending at the same level as a month earlier despite steady gains in income, the Commerce Department (search) said on Wednesday.
Personal spending was unchanged last month after dropping 0.3 percent in September, a weaker performance than anticipated by Wall Street economists who had forecast a slim 0.1 percent spending pickup.
The slack in spending was concentrated in the auto industry and may partly reflect the waning impact of tax cuts (search) that lowered the amount withheld from paychecks as well as child tax credit rebates (search) in the summer. But it was not a promising sign ahead of the vital Thanksgiving-to-Christmas holiday shopping season when many merchants count on making as much as 70 percent of their annual sales.
Incomes rose 0.4 percent in October — in line with economists' forecasts — after gains of 0.3 percent in each of the three preceding months from July through September.