THE ECONOMY : Earning More, Spending Less
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The indicators: Personal income and consumer spending.
* What they did: Incomes climbed 0.6% in September--the eighth straight increase--while spending rose just 0.2%, the weakest showing since it dropped 0.3% in April.
* What it means: Americans are taking home more money and also saving more, as the economy continues to grow at a steady, moderate pace. The new data on income and spending means Americans’ savings rate--savings as a percentage of disposable income--was up to 4.1% in September, from 3.7% the previous month.
* Highlights: The income data was a little stronger than many analysts had expected and spending figures were a little lower. Analysts said stock market traders paid little attention to the report. “Consumer spending is not the mover of the economy now; it’s the follower,” said Laurence Meyer, who heads a St. Louis forecasting firm. He noted that auto sales, after a particularly strong August, leveled off in September and helped hold down overall spending. Spending, which accounts for two-thirds of the nation’s gross domestic product, was up for the fifth straight month and the seventh out of the last eight.
Personal Income
Trillions of dollars, seasonally adjusted annual rate:
Sept., 1994: $5.76
Source: Commerce Department
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