U.S. Consumer Spending Jumps 0.7% in October

Nov. 25, 2009
Up from 0.6% drop in September

Helped by a rebound in auto sales, consumer spending jumped 0.7% government data showed on Nov. 25. The surge in household expenditures rebounded from a a 0.6% drop in September, according to Commerce Department data.

The report highlighted volatility from the "cash for clunkers" program that sparked auto sales until its expiration in August. This resulted in a sharp fall in consumer spending in September, followed by October's rebound.

A separate report showed orders for durable manufactured goods fell 0.6% in October, dragged down by a slump in defense aircraft and other transportation goods, which can show volatility.

Excluding defense, new orders for durable goods -- which are expected to last at least three years -- rose 0.4%.

Marisa Di Natale at Moody's Economy.com said the report suggested however that manufacturing, leading the U.S. economy recovery, is starting to struggle. "The bulk of the decline in orders came from machinery manufacturers where orders fell eight percent over the month, the largest decline in the category since January," she said.

"This helped to drag down core capital goods orders by 2.9%. Core capital goods orders, a proxy for investment spending in equipment and software in the GDP (gross domestic product) report, have fallen in three of the last four months.

The data also showed personal incomes grew 0.2% and a 0.4% increase in disposable income.

Spending had increased four consecutive months before the fall in September.

The October data showed the savings rate fell slightly to 4.4% from 4.6% a month earlier.

Copyright Agence France-Presse, 2009

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