TEHRAN, October 29 -U.S. consumer spending rose for a seventh straight month in September, but income recorded its smallest gain in more than a year amid moderate wage growth, suggesting the current pace of spending was unlikely to be sustained.
TEHRAN, Young Journalists Club (YJC) -U.S. consumer spending rose for a seventh straight month in September, but income recorded its smallest gain in more than a year amid moderate wage growth, suggesting the current pace of spending was unlikely to be sustained.
The Commerce Department said on Monday consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.4 percent last month as households bought more motor vehicles and spent more on health care.
Data for August was revised up to show spending advancing 0.5 percent instead of the previously reported 0.3 percent gain.
Economists polled by Reuters had forecast consumer spending increasing 0.4 percent in September. When adjusted for inflation, consumer spending rose 0.3 percent. The so-called real consumer spending climbed 0.4 percent in August.
The data was included in last Friday’s third-quarter gross domestic product report, which showed consumer spending accelerating at a 4.0 percent annualized rate, the fastest in nearly four years.
The economy grew at a 3.5 percent rate in the third quarter, a slowdown from the April-June period’s robust 4.2 percent pace.
Prices of U.S. Treasuries were trading lower on Monday while U.S. stock index futures were higher. The dollar .DXY was slightly stronger against a basket of currencies.
SAVINGS FALL
September’s rise in real consumer spending sets it on a solid growth path heading into the fourth quarter.
But the momentum is likely to slow. Personal income rose 0.2 percent in September, the smallest increase since June 2017, after gaining 0.4 percent in August. Wages rose 0.2 percent after jumping 0.5 percent in August.
Wage growth remains gradual despite the unemployment rate being near a 49-year low of 3.7 percent. The saving rate fell to $975.7 billion last month, the lowest level since December 2017, from $1.0 trillion in August.
The moderation in income and savings comes amid signs that the stimulus from the Trump administration’s $1.5 trillion tax cut package has peaked. In addition, the stock market sell-off is seen eroding household wealth.
In September, spending on goods surged 0.6 percent. Consumers also spent more on sporting goods. Outlays on services gained 0.3 percent, with spending on health care offsetting a decrease in spending at restaurants and on accommodation.
Source: Reuters
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