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Consumer Spending Slows in September

NEW YORK ( TheStreet) -- Personal income unexpectedly fell in September while personal spending grew less than expected, according to latest data from the Bureau of Economic Analysis.

Personal income dropped 0.1%, after rising 0.4% in August. Economists were expecting incomes to increase, according to consensus estimates from Real disposable income, adjusted for price changes, decreased 0.3%.

Emergency unemployment insurance benefits which boosted personal incomes in August, fell in September. Excluding the impact of unemployment compensation legislation, personal incomes increased 0.1% in September, still lower than a 0.3% increase in August.

Personal consumption expenditure (PCE) rose 0.2% during the month, following a 0.5% increase in August. Personal saving as a percentage of disposable personal income was 5.3% in September, compared with 5.6% in August.

Real personal consumption expenditure, which adjusts for price changes, increased 0.1% in September, compared with an increase of 0.3% in August. An increase in durable goods spending was offset by a decrease in nondurable goods expenditure and a modest increase in services spending.

The PCE price index, the preferred barometer of inflation for the Federal Reserve, expanded 0.1% in September, after rising 0.2% in August. On a year-on-year basis, the index rose 1.4% in September, according to preliminary estimates. Excluding volatile food and energy prices, the PCE price index increased by the slowest rate in 2010, up 0.9%, after rising 1.1% in August.

The Fed believes inflation at current levels is too low and below its mandate for maintaining price stability. The central bank has indicated that it prefers inflation at close to 2%.

-- Written by Shanthi Venkataraman in New York

>To contact the writer of this article, click here: Shanthi Venkataraman.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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