- The Washington Times - Monday, October 30, 2006

ASSOCIATED PRESS

Consumers kept a pretty firm grip on their wallets in September, boosting spending by just 0.1 percent, the smallest increase in 10 months.

The Commerce Department’s report, released yesterday, showed that consumers had a yen for big-ticket goods such as cars and appliances last month, but they cut spending on nondurable goods such as food and clothes.

The increase in spending in September, down from a 0.2 percent rise posted in August, matched a 0.1 percent rise in November of last year. The last time spending was weaker was in August of last year, when consumers trimmed purchases by 0.1 percent.

Americans’ incomes, the fuel for future spending, rose by a brisk 0.5 percent in September. That was up from 0.4 percent in August and marked the biggest gain since June.

The income and spending figures aren’t adjusted for inflation.

September’s spending increase was less than the 0.3 percent gain that economists were expecting. Income growth, however, turned out to be stronger than the 0.3 percent increases that economists were forecasting.

Even though consumers spent respectably during the July-to-September quarter as a whole, the economy grew at a feeble pace of 1.6 percent, the slowest in more than three years. The culprit in the slowdown: the slumping housing market, which shaved just over one percentage point from overall economic activity.

With the Nov. 7 elections around the corner, the latest snapshot of national economic health fueled fresh debate between Republicans and Democrats competing with each other to hold sway at the ballot box.

Economists, meanwhile, are hopeful the current October-to-December quarter will turn out to be better and that the housing slump will not be a significant drag on overall economic activity. In addition, lower energy prices should help out, taking pressure off consumers and businesses and making them more inclined to spend and invest.

With income growth outpacing spending, Americans’ personal saving rate — savings as a percentage of after-tax income — came in at a negative 0.2 percent in September, an improvement from negative 0.5 percent recorded in August.

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