Newspaper article THE JOURNAL RECORD

Consumer Spending Fell 0.9 Percent in October

Newspaper article THE JOURNAL RECORD

Consumer Spending Fell 0.9 Percent in October

Article excerpt

WASHINGTON (AP) - Consumer spending took its steepest dive in nearly three years in October, the government said Thursday, and analysts said continued sluggishness in personal consumption is likely to be a major drag on the economy in the fourth quarter.

However, personal income rose a healthy 0.9 percent, which analysts said indicates consumers still have spending power, but are just waiting for bargains.

``It's not going to be a great Christmas in terms of shopping and (retail) earnings,'' said Sandra Shaber, an economist with the Futures Group, a Washington consulting firm. ``People will just wait until things go on sale.''

The Commerce Department said spending, reflecting plummeting auto sales in October, dropped 0.2 percent to a seasonally adjusted annual rate of $3.53 trillion after edging up 0.3 percent in September.

October marked the first decline in personal spending since a 0.1 percent drop in September 1988 and the steepest since a 1.4 percent fall in January 1987.

Consumer spending accounts for about two-thirds of the nation's economic activity and the spending report provided fresh evidence that the economy is continuing to slow.

``Consumer spending is starting the fourth quarter on an extremely weak note,'' said David Jones, an economist with Aubrey G. Lanston & Co. in New York. ``And since it represents two-thirds of the gross national product, I think it will be a major drag on the economy in the fourth quarter.''

Income totaled $4.51 trillion, the largest advance since a 1 percent gain last March. It rose 0.3 percent in September.

The San Francisco Bay-area earthquake knocked $21 billion out of the income figure at an annual rate, but that was offset partially by other one-time factors, including a $7.2 billion increase in farm subsidies and $6.8 billion in bonuses to auto industry employees.

``Excluding the impact of the special factors, personal income increased about $33 billion, or 0. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.