What could slow a fairly robust economic recovery? A pullback in consumer spending.
Consumer spending weakened toward the end of the third quarter, indicating purchases could slow early in the crucial October-December period, and threaten the economy’s momentum.
But at the same time, gas prices are falling below $3 a gallon in many parts of the country, giving Americans extra spending dollars as the holidays approach.
The U.S. economy grew at a 3.5 percent annual pace in the third quarter, but U.S. consumer spending fell for the first time in eight months in September, the U.S. Commerce Department said Friday.
Overall, consumer spending fell $19 billion to $11.97 trillion, declining 0.2 percent last month, after a 0.5 percent increase in August. Personal income rose 0.2 percent, the smallest rise since December. Incomes were up 0.3 percent in August.
Analysts had forecast spending growth to slow last month but still tick up 0.1 percent.
Consumer spending, including monthly mortgage payments not included in the Commerce Department data, accounts for about two-thirds of economic activity.
Auto purchases accounted for most of the decline in spending last month, but contributed to most of August’s 0.5% increase, the Commerce Department said.
Economists downplayed the dip in consumer spending for September, which saw a continuation of robust auto sales.
“The future for consumer spending looks bright with falling gasoline prices putting extra dollars in consumers’ pockets, and for the first time since the recession we can say it looks like wages are starting to rise,” Chris Rupkey, chief financial economist at Union Bank, told the L.A. Times.