U.S. consumer spending rose three times
as much as incomes in September, causing families to dip into
savings at a time when energy bills are forecast to rise, a
government report showed. Measures of prices were tame.
The 0.6 percent increase in purchases followed at 0.1 percent
drop in August, the Commerce Department reported in Washington.
Incomes rose 0.2 percent, restrained by declines in rental and
business owner incomes caused by hurricanes that struck the
Southeast. In August, incomes were up 0.3 percent. The savings
rate fell to the second-lowest on record.
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A jump in sales of automobiles in September helped the economy
accelerate in the third quarter, a Commerce Department report Oct.
29 showed. Americans go to the polls today to decide whether to
give President George W. Bush another term in office. Polls show
voters say the economy is the most important issue in the
election.
“The fact that income growth has been disappointing is
clearly negative for spending going forward,” said Christopher
Low, chief economist at FTN Financial in New York. “There is no
question that the slow growth of wages and salaries has been a big
factor in shaping consumer attitudes, which remain quite low.”
Economists forecast spending to rise 0.6 percent after the
government previously reported no change in August, according to
the median of 55 estimates in a Bloomberg News survey. They also
estimated a 0.3 percent increase in incomes after a 0.4 percent
rise. Forecasts for spending last month ranged from an increase or
0.3 percent to a 0.9 percent gain, according to the survey.
Expectations for incomes ranged from no change to a 0.5 percent
gain.
Incomes are falling short as payroll gains slow. The economy
added an average 103,000 new jobs per month last quarter, compared
with 204,000 per month from January through June. Wages, salaries
and bonuses received by workers increased at a 4.5 percent annual
rate in the third quarter after a 5.1 percent pace in the April-
June quarter.
While worker pay slowed for a third straight quarter, it’s
exceeding the rate of inflation. The personal consumption
expenditures index rose at a 1.1 percent annual rate in the three
months ending in September.
The economy and jobs ranked as the single most important
issue for 24 percent of voters polled by the Washington Post last
week, followed by the war in Iraq with 23 percent and terrorism
with 19 percent. John Kerry, a four-term Massachusetts senator,
has criticized Bush’s policies for failing to promote more job
gains.
Polls last week showed voters who picked the economy as the
most important issue supported Kerry while those that viewed Iraq
and terrorism as a larger concern favored Bush.
Consumer spending, which accounts for more than two-thirds of
the economy, grew at a 4.6 percent annual pace last quarter,
almost three times faster than in the previous three months. The
rebound in spending helped the economy expand 3.7 percent at an
annual rate compared with 3.3 percent in the second quarter.
Disposable income, or the money left over after taxes,
rose 0.1 percent in September following a 0.2 percent rise the
previous month. Wages and salaries increased 0.4 percent after
increasing 0.3 percent.
Bloomberg News
