U.S. Consumer Spending Rises Most Since 2009 on Car BuyingBy
U.S. consumer spending rose in September by the most since August 2009 as motor vehicle purchases surged in the aftermath of two hurricanes, Commerce Department figures showed Monday. Stagnant inflation-adjusted incomes and the smallest saving rate in almost a decade indicate outlays may cool.
Highlights of Income and Spending (September)
The jump in September outlays was driven by purchases of durable goods including the replacement of motor vehicles lost in recent flooding from hurricanes. That means the latest surge probably overstates the strength of consumer spending.
The last time spending rose as much was in mid-2009 when auto purchases were fueled by a federal government incentive program called “cash-for-clunkers.”
Meanwhile, real disposable income was flat after a 0.1 percent decline in August. While consumers are getting support from steady hiring, higher home values, stock-market gains and still- low inflation, a sustained pickup in wages would help them further boost purchases.
A government report on Friday showed household spending increased at an annualized 2.4 percent rate in the third quarter after a 3.3 percent pace during the previous three months.
The figures on prices showed inflation only inched up toward the Federal Reserve’s 2 percent goal. The central bank’s preferred inflation gauge has missed the Fed’s target for most of the past five years.
- Wages and salaries rose 0.4 percent following a 0.1 percent increase
- Adjusted for inflation, purchases rose 0.6%, the biggest gain since March, after a 0.1% decline
- Spending on durable goods rose 3.5 percent after adjusting for inflation after a 1.4 percent decline in August
- Outlays on services rose 0.3 percent, while spending on non- durable goods also advanced 0.3 percent
— With assistance by Kristy Scheuble