U.S. consumer spending rose 0.2% in September
A rising saving rate suggests that Americans have some financial leeway
WASHINGTON — American consumers modestly stepped up their spending in September, but their incomes grew fast enough to let them save more, too.
The Commerce Department said Thursday that consumer spending rose 0.2% in September, matching August’s increase but coming in slightly below economists’ expectations. Incomes grew 0.3% lifting the U.S. savings rate to 8.3% in September, highest since March.
A measure of inflation closely watched by the Federal Reserve was flat in September, even excluding volatile food and energy prices. Over the past year, it is up 1.3%, and 1.7% without food and energy.
Consumer spending accounts for about 70% of U.S. economic activity. The government reported Wednesday that consumer spending rose at a solid annual pace of 2.9% from July through September, a bright spot in a quarter when the overall economy grew a mediocre 1.9%.
The rising saving rate is encouraging because it suggests consumers have financial leeway to keep spending and supporting an economic expansion that has already entered a recordbreaking 11th year. The savings rate had dropped to 3.2% in 2005 before the Great Recession.
On Wednesday, the Fed, reassured by modest inflation but worried that President Donald Trump’s tariff war with China will hobble economic growth, cut short-term interest rates for the third time this year.
In a separate report, annual wages and benefits for U.S. workers continued to rise at a modest pace in the third quarter, even as unemployment stays near a half-century low.
The Labor Department says that growth in pay and benefits for all U.S. workers rose 2.8% in the July-September quarter, compared to the same period in 2018. That’s at a slightly quicker pace than the second quarter’s 2.7% growth.
The report was reflective of the hesitance of employers to step up wages, even in a strong job market. Compensation ticked up to a seasonally-adjusted rate of 0.7%.