Personal Income Up, But Savings Rate Outpaces Consumer Spending

Personal Income Up, But Savings Rate Outpaces Consumer SpendingThis bit of economic data may surprise you: Americans’ income increased more than projected in September.
But spending slowed, registering an increase of 0.2 percent, down from 0.3 percent in August, the Commerce Department said.
Personal income jumped 0.5 percent in September from the previous month, marking the second-straight month of growth at that rate. And that’s the best pace since February.
But the spending slowdown is worrisome, since consumer purchases make up a huge piece of an economic recovery.
Americans saved more money, possibly an indication of anxiety over the government shutdown that commenced Oct. 1 and ended Oct. 16. The 16-day closure of many federal offices resulted in a delay in the release of the September personal income report.
The personal savings rate jumped to 4.9 percent in September, from 4.7 percent the previous month. It was the highest rate of the year. However, this level is historically low.
Separately, an update of consumer confidence released Friday showed that Americans continue to lower their expectations for the economy into November. That’s another bad sign for spending as the holiday shopping season approaches.
The Thomson-Reuters/University of Michigan index of consumer sentiment fell to a two-year low of 72 in November, compared to 73.2 in October.

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