Personal Income Up 0.5%, Spending Jumps by 1.1%

Personal income rose 0.5% in September while consumer spending increased 1.1%, the steepest jump in three months, the government said today.

The Commerce Department said income totaled a seasonally adjusted annual rate of $4.70 trillion, a $23.8-billion increase over August.

At the same time, it said spending totaled a seasonally adjusted annual rate of $3.73 trillion, up $39.9 billion from a month earlier. It was the biggest increase since a 1.2% gain last June.

In its report on the third-quarter gross national product on Tuesday, the department said consumer spending from July through September rose 3.6%, well above the 0.2% advance from April through June.

Consumer spending is considered a barometer of economic health because it accounts for about two-thirds of the nation’s economic activity.

But Americans’ savings rate--savings as a percentage of disposable income--fell to 3.5%, down from 4.1% in August. It was the lowest rate in three years and showed that consumers were dipping into their savings to fund their purchases.

A higher savings rate means less dependence on foreign capital because funds would be available domestically for business investment. Americans’ savings rate for all of 1989 was 4.6%.

The report said Americans’ income after taxes increased 0.4%.