WASHINGTON Nov 30 U.S. consumer spending fell
in October for the first time in five months as income growth
stalled, suggesting slower economic growth in the fourth
The Commerce Department said on Friday consumer spending
fell 0.2 percent after an unrevised 0.8 percent rise in
It said it could not quantify the impact of superstorm
Sandy, but added it made adjustments where source data was not
yet available or did not reflect the effects of the storm.
Though the storm, which slammed the East Coast in late
October, put a brake on automobile sales, the drop in spending
last month was in part a reflection of the weak economic
Economists polled by Reuters had expected consumer spending,
which accounts for 70 percent of U.S. economic activity, would
be flat last month.
When adjusted for inflation, consumer spending fell 0.3
percent, the first decline since June, after rising 0.4 percent
the prior month.
It was also the largest decline since September 2009 and
implied growth in consumer spending this quarter would struggle
to exceed the third-quarter's 1.4 percent annual pace, which was
the slowest in more than a year.
While the economy grew 2.7 percent in the third quarter
after advancing 1.3 percent in the prior three months, much of
the boost came from the restocking of goods and robust
government spending. That is likely to be lost in the final
three months of the year.
Growth could also be pressured by the lingering effects of
the storm and automatic deep cuts to government spending and tax
increases that could drain $600 billion early next year unless
Congress and the Obama administration agree on a less-severe
plan to cut budget deficits.
Income was unchanged in October for the first time since
April and followed a 0.4 percent gain in September. The
department said private wages and salaries fell, reflecting work
interruptions caused by Sandy.
The amount of income at the disposal of households
after inflation and taxes dipped 0.1 percent after being flat in
September. Despite weak income growth, the saving rate rose to
3.4 percent from 3.3 percent the prior month.