Personal Income Rises, Outlays Fall

By John S. McClenahen Even as the U.S. economy soared to a 7.2% annual growth rate during this year's third calendar quarter, during September consumers slowed their spending. Personal consumption expenditures decreased 0.3% in September, following a 1.1% increase in August, reveal data from the U.S. Commerce Department. Economists generally expected a 0.1% decline in September. "The absence of [tax] rebate checks likely played some role," says Maury Harris, chief U.S. economist at UBS Investment Research, New York. "With no more tax relief due [in the fourth quarter of this year], spending likely will be linked more closely to job growth," he says. And Harris believes job growth is picking up a bit. Indeed, he expects this week's employment data to show 50,000 jobs added in October. In contrast to the falling rate of consumer spending, personal income increased 0.3% in September, a bit more than most economists expected. "Dividends, rents, small business income and Medicare payments continue to partly compensate for the paucity of wage gains," says UBS' Harris.

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