Consumer spending picked up sharply in September, positioning American households to propel economic growth heading into the final quarter of the year.
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Personal consumption expenditures, a measure of household spending on everything from washing machines to haircuts, increased a seasonally adjusted 1.0% in September from the prior month, the Commerce Department said Monday. The increase marked the largest month-over-month gain in eight years. Economists surveyed by The Wall Street Journal had expected a 0.8% rise.
Consumers stepped up spending on durable goods, which include longer-lasting items like refrigerators, as well as nondurable goods like clothing and food.
Personal income, a measure that includes wages and government assistance, climbed 0.4% from the prior month, in line with economists' expectations.
The personal-saving rate was 3.1% in September, down from 3.6% the prior month and the lowest rate since December 2007.
The Commerce Department said the August and September estimates of personal income reflect the effects of Hurricanes Harvey and Irma, which shut down parts of Texas and Florida in August and September. The agency, however, couldn't quantify the storms' effects.
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Monday's report also showed the Federal Reserve's preferred measure of inflation, the price index for personal consumption expenditures, increased 0.4% in September from the prior month. Excluding the often-volatile categories of food and energy, so-called core prices were up only 0.1% in September.
Overall inflation rose 1.6% in September from a year earlier, up from a 1.4% year-over-year increase in August. From a year earlier, core prices remained muted in September, growing 1.3% on an annual basis.
The Fed targets a 2% annual inflation rate. The price index slightly exceeded that level in February for the first time in nearly five years but has since settled lower. The Federal Reserve meets this week and will release a policy statement Wednesday at 2 p.m. The central bank is not expected to move on interest rates but could offer clues about a possible rate increase at its meeting in December.
Overall, the economy appears to be advancing at a steady pace. Consumer spending accounts for about two-thirds of U.S. economic output, typically making it the primary driver of economic output.
Friday's Commerce Department report on gross domestic product showed that consumer spending rose at a 2.4% pace in the third quarter, below the trend of recent years but solid considering the storms that prevented many Americans from going out shopping or eating. Households in September continued to step up spending, boosted by low unemployment, low inflation and a booming stock market.
The Commerce Department's report on personal income and spending can be accessed at: https://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm
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(END) Dow Jones Newswires
October 30, 2017 08:45 ET (12:45 GMT)