Americans' Spending, Income Up in September
Consumer spending increased somewhat in September, but income grew by the largest amount in 10 months, a federal report says.
The U.S. Department of Commerce said income rose 1.7 percent, due in part to post-hurricane insurance payouts, which increased at a $120 billion annual rate, Reuters reported. Consumer spending increased 0.5 percent in September, but when the figures were adjusted for inflation, the increase turned into a 0.4 percent drop because soaring fuel prices eroded the gains.
Consumer spending amounts to about two-thirds of all economic activity. The report showed the spending went up on “nondurables,” such as food, clothes and gasoline, but dropped for bigger ticket items, such as cars.
| Don’t miss the FRx Express-the traveling FRx Software product and training road show, coming soon to a city near you! Discover helpful FRx Software tips and tricks, see product demonstrations of Microsoft® FRx® and Microsoft Forecaster, and attend a product Q & A forum. Register now!
|FRx Software Home||Product Information|
|Training & Consulting||Product Demo|
|Webcast||Customer Testimonial Video|
Analysts said that Hurricanes Katrina and Rita made the spending and income data difficult to interpret.
The income figures for August had been revised downward to a 0.9 percent drop, due to the uninsured business property losses in the Gulf Coast caused by Hurricane Katrina, which hit August 29.
The Commerce Department reported that by removing the depressed rental and proprietors' income and the income increase from insurance that followed, personal income would have grown by 0.5 percent in September and 0.3 percent in August.
"We don't get away scot-free, but the underlying economy remains tough and sturdy," Mark Zandi, chief economist at Economy.com, told the Associated Press.
Analysts expect consumer spending to drop off in the last quarter of the year, as Americans will have to dig deeper to pay energy costs. Auto sales incentives are also ending.
"We will see a moderation - but not a collapse - in consumer spending," predicted Anthony Chan, senior economist at JP Morgan Asset Management, according to AP.
A separate report on Midwest manufacturing noted increases in new orders and new hires. An index of Midwest manufacturing activity rose in October to 62.9 from 60.5 in September, according to the National Association of Purchasing Management-Chicago.
"It reaffirms the view that the U.S. economy remains on a solid growth track," Alex Beuzelin, a senior market analyst with Ruesch International in Washington, told Reuters.
Voice of the Editor
Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.