US consumer spending increases at slower pace
By Martin Crutsinger |
November 2, 2010, Tuesday
|
Print Edition
Print Edition
AMERICANS slowed their spending in September to the weakest pace in three months and their incomes fell for the first time in 14 months.
Consumer spending rose at an annual rate of 0.2 percent in September, the US Commerce Department said yesterday. 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 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.
Those extended benefits expire at the end of November. It's unclear if Democrats can muster enough votes to pass one more extension of benefits before the year ends.
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.
"In the current environment, consumption cannot outgrow incomes for long. Without a meaningful acceleration in jobs growth, which remains unlikely, consumption growth will slow again," Paul Dales, chief US economist at Capital Economics, said in a research note.
Consumer spending is watched closely because it accounts for 70 percent of total economic activity in the US.
Consumer spending rose at an annual rate of 0.2 percent in September, the US Commerce Department said yesterday. 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 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.
Those extended benefits expire at the end of November. It's unclear if Democrats can muster enough votes to pass one more extension of benefits before the year ends.
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.
"In the current environment, consumption cannot outgrow incomes for long. Without a meaningful acceleration in jobs growth, which remains unlikely, consumption growth will slow again," Paul Dales, chief US economist at Capital Economics, said in a research note.
Consumer spending is watched closely because it accounts for 70 percent of total economic activity in the US.
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