Tuesday, November 2, 2010

Sept. consumer spending weak while incomes dip

From the Associated Press on Nov. 1:
WASHINGTON (AP) — Americans slowed their spending in September to the weakest pace in three months, and their incomes fell for the first time in 14 months.

Personal spending rose at an annual rate of 0.2 percent in September, the Commerce Department said Monday. That's below the 0.5 percent gains recorded in July and August.

Incomes fell 0.1 percent in September, following a 0.4 percent rise in August that was pushed higher by the return of extended unemployment benefits.

The drop in incomes was the first decline since incomes fell 0.3 percent in July 2009. The August gain was skewed by the reinstatement of an extended unemployment benefits program, which temporarily lapsed in July after Republicans blocked an extension.

Those extended benefits expire at the end of November. It's unclear whether Democrats can muster enough votes to pass one more extension of benefits before the year ends.

The weak growth in spending and incomes underscored how fragile the economy remains. Consumers facing high unemployment and slow job growth remain reluctant to spend.

"In the current environment, consumption cannot outgrow incomes for long. Without a meaningful acceleration in jobs growth, which remains unlikely, consumption growth will slow again," Paul Dales, chief U.S. economist at Capital Economics, said in a research note.


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