Consumers in the U.S. increased their spending in September by the fastest rate since February and at twice the rate of incomes rising, a sign of confidence in the economy. The U.S. Commerce Department announced on Monday that consumer household purchases increased 0.8 percent in September, while personal incomes rose 0.4 percent. Spending had risen 0.5 percent in August.
Consumer spending accounts for about 70 percent of the economy, but since growth remains limited and unemployment is still at high levels, the U.S. Federal Reserve is maintaining its plan to buy bonds and keep interest rates low.
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Savings fell to 3.3 percent, the lowest since November, while disposable income, or the money left over after taxes, dropped 0.3 percent after adjusting for inflation. Price-adjusted spending on durable goods, including automobiles, climbed 1.3 percent. Purchases of non-durable goods, including gasoline, rose 0.5 percent, while services grew 0.2 percent. Retail sales in September and August showed the best back-to- back performance since late 2010, with goods such as Apple’s (NASDAQ:AAPL) iPhone and retailers including Target (NYSE:TGT) seeing healthy sales.
Unemployment and economic growth are two of the main issues in the presidential race between Barack Obama and Mitt Romney that culminates in the November 6 polls. While Republican nominee Romney has said Obama’s policies are preventing growth, the latter insists the economy is recovering after a downturn helped on by the previous administration. The unemployment rate dropped to 7.8 percent last month, the first time it has been below 8 percent since January 2009.