US Consumer Spending Falls As Economy Might Be Losing Speed

US consumer spending fell in September for the first time in eight months, suggesting the economy lost some momentum heading into the fourth quarter.

The Commerce Department said on Friday consumer spending declined 0.2% last month as demand for goods tumbled and services barely rose. Spending had increased by an unrevised 0.5% in August.

Economists polled by Reuters had expected consumer spending, which accounts for more than two-thirds of US economic activity, to increase 0.1% in September.

When adjusted for inflation, consumer spending fell 0.2%. That was the first drop since April and followed a 0.5% rise in August.

The data was included in Thursday’s gross domestic product report, which showed the economy expanded at a 3.5% annual rate in the third quarter after a 4.6% pace in the second quarter.

The softer consumer spending at the end of the third quarter could add to expectations of slower growth in the final three months of the year. A report on Tuesday showed unexpected weakness in business spending plans for equipment in September.

But with gasoline prices at a near four-year low and faster job growth expected to boost wages, the slowdown in consumer spending could be temporary.

Income rose 0.2% in September after increasing 0.3% in the prior month. With income growth outpacing consumption, savings jumped to $732.2bn, the highest level since December 2012, from $702.0bn in August.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza