8:50am

Fri October 28, 2011
The Two-Way

Consumer Spending Rose In September, But At Expense Of Savings

There was a 0.6 percent increase in consumer spending in September vs. August, the Bureau of Economic Analysis reports. The increase was much larger than the 0.2 pecent gain in August from July.

But personal income grew only 0.1 percent last month — meaning that consumers dug into their savings in order to boost spending. According to the bureau: "Personal saving as a percentage of disposable personal income was 3.6 percent in September, compared with 4.1 percent in August."

And that's why Reuters writes this:

"Sluggish growth in U.S. consumer income in September led households to cut back on saving to increase their spending, casting doubts over the durability of the economy's third-quarter growth spurt."

Bloomberg News adds that:

"Given the state of consumer sentiment and the savings rate, we should see moderate spending, at best, going forward," said Sean Incremona, a senior economist at 4Cast Inc. in New York who correctly forecast the increase in purchases. "The savings rate is just one of those warning signs that says we're not pulling ourselves out vigorously, so the economy still has a lot of vulnerability."

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