Herald Citzen
 LATEST NEWS
 Top Stories
 U.S.
  Severe Weather
  Bird Flu
 World
  Castro
  Mideast Crisis
  Iraq
 Business
 Personal Finance
 Technology
 Sports
  Sports Columns
  NASCAR
  Baseball
  College Hoops
  NBA
  NHL
  Tennis
  Golf
 Entertainment
 Health
 Science
 Politics
 Washington
 Offbeat
 Podcasts
 Blogs
 Weather
 Raw News
 NEWS SEARCH
 
 Archive Search
 SPECIAL SECTIONS
 Multimedia Gallery
 AP Video Network
 Today
 in History
 Corrections
Oct 31, 10:12 AM EDT

US consumer spending down 0.2 percent in September


AP Photo
AP Photo/Matt Rourke
Business Video

Multimedia
A district summary of the Beige Book
Measuring economic stress by county nationwide
Mall malaise: shoppers browse, but don't buy
Unemployment by the numbers
Family struggles with father's unemployment
Saying an affordable goodbye
Hard times hit small car dealer
Latest Economic News
Bank of Japan redoubles efforts to revive economy

Euro inflation creeps up, ECB still under pressure

Russia central bank in surprisingly big rate hike

Q&A: Why Japan's economy needs more juice

Puerto Rico government looks to raise tax on oil

Strengthening US growth reflects help from Fed

Yellen: Awareness of economists' diversity needed

German unemployment dips again in October

Spanish economy grows for 5th quarter in a row

Syria's 3 1/2-year conflict roiling the economy

Buy AP Photo Reprints

WASHINGTON (AP) -- U.S. consumer cut spending in September for the first time in eight months, as incomes grew at the slowest pace this year. The figures underscore nagging economic soft spots that are expected to ease in the coming months.

Consumer spending slipped 0.2 percent in September, the Commerce Department reported Friday, the weakest performance since an identical decline in January. Income edged up 0.2 percent in September in the smallest monthly gain since a flat reading last December.

Shoppers appeared to take a breather after a big spending spree in August, which lifted consumer spending 0.5 percent. Economists say September's downturn shouldn't last, especially amid a strengthening job market and a growing economy.

Spending, which accounts for 70 percent of economic activity, has fallen only three times since the recession ended in 2009.

Economists blamed the weak September spending figure on falling energy prices and slower auto sales after a surge the previous month.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said he expects consumer spending to accelerate to a 2.5 percent rate in the current October-December quarter, faster than the 1.8 percent spending gain in the third quarter.

"The next couple of months will see spending pick up strongly as people start to spend their windfall from falling gas prices," Shepherdson said.

In September, spending on durable goods such as autos dropped a sizable 2 percent after a 2.1 percent jump in August. Spending on nondurable goods such as clothing, food and gasoline, was down 0.3 percent, while spending on services such as doctor's visits and utilities posted a modest 0.2 percent rise.

Lower prices at the pump mean consumers will have more to spend on other items.

Another reason for optimism is continued strong job growth, which pushed the unemployment rate down to a six-year low of 5.9 percent in September. More people working means higher incomes and more fuel to drive consumer spending.

The small rise in income and the decline in spending in September resulted in a slight increase in the saving rate.

Savings as a percentage of after-tax income rose to 5.6 percent in September, up from 5.4 percent in August. The saving rate averaged 4.9 percent in 2013, down from 7.2 percent in 2012. That had been the highest level in nearly two decades as Americans worked to boost savings following the 2007-2009 recession.

Inflation as measured by a gauge tied to consumer spending edged up a slight 0.1 percent in September, with prices up just 1.4 percent over the last 12 months. That is well below the 2 percent target for annual price increases which the Federal Reserve considers an optimal level for inflation.

The government reported Thursday that the overall economy, as measured by the gross domestic product, grew at an annual rate of 3.5 percent in the July-September quarter. Analysts believe after five years of sub-par economic growth, the economy has finally accelerated, helped by solid employment growth.

Economists project growth of 3 percent in the current quarter, helped by solid consumer spending. They are also forecasting 3-percent growth in 2015, which would be the strongest level since 2005, two years before the start of the Great Recession.

The improving economy prompted the Federal Reserve this week to end its third round of bond purchases, which have pushed the central bank's balance sheet up by more than $3 trillion over the past six years. The Fed bought the bonds as a way to put downward pressure on long-term interest rates and provide an extra boost to the economy after it had slashed its key short-term rate to a record low near zero.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.