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Reuters
Published
Oct 30, 2017
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U.S. consumer spending grows at fastest pace since 2009

By
Reuters
Published
Oct 30, 2017

U.S. consumer spending recorded its biggest increase in more than eight years in September, likely as households in Texas and Florida replaced flood-damaged motor vehicles, but underlying inflation remained muted.


Reuters



The Commerce Department said on Monday consumer spending, which accounts for more than two-thirds of U.S. economic activity, jumped 1.0 percent last month. The increase, which also included a boost from higher household spending on utilities, was the largest since August 2009.

Consumer spending rose by an unrevised 0.1 percent in August. Economists polled by Reuters had forecast consumer spending increasing 0.8 percent in September.

Prices of U.S. Treasuries were higher in early morning trading while the dollar was weaker against a basket of currencies. U.S. stock index futures were mixed. The data was included in last Friday’s third-quarter gross domestic product report, which showed consumer spending growth slowing to a 2.4 percent annualized rate after a robust 3.3 percent pace in the second quarter.

The moderation in consumption was offset by a rise in inventory investment, business spending on equipment and a drop in imports, which left the economy growing at a 3.0 percent rate in the third quarter after the April-June period’s brisk 3.1 percent pace.

The Commerce Department said September data reflected the effects of Hurricanes Harvey and Irma, but said it could not quantify the total impact of the storms on consumer spending and personal income.

Though disruptions to the supply chain as a result of the hurricanes also likely contributed to an uptick in inflation last month, underlying price pressures remained benign.

When adjusted for inflation, consumer spending increased 0.6 percent in September after slipping 0.1 percent in August.

While that put consumer spending on a higher growth trajectory heading into the fourth quarter, it is unlikely to be sustained as households increasingly rely on dwindling savings to fund purchases.

Personal income rose 0.4 percent last month after increasing 0.2 percent in August. Wages advanced 0.4 percent. Savings fell to $441.9 billion in September, the lowest level since August 2008, from $521.4 billion in the prior month.

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