Americans unexpectedly opened their wallets less in September, with spending posting its first drop in eight months as income growth slowed, the Commerce Department said Friday.
Consumer spending declined 0.2 percent last month, after a 0.5 percent jump in August.
Personal income rose 0.2 percent, the smallest rise since December. Incomes were up 0.3 percent in August.
Analysts had forecast spending growth to slow last month but still tick up 0.1 percent. Incomes were expected to rise 0.3 percent.
Instead, overall consumer spending fell $19 billion, to $11.97 trillion, in a sign economic growth might be slowing heading into the year’s fourth quarter.
Economists downplayed the drop, noting that it came after a big jump in August.
Consumer spending, including monthly mortgage payments that are not included in the Commerce Department figures, accounts for about two-thirds of economic activity.
Auto purchases accounted for most of the decrease in spending last month and most of August’s 0.5 percent increase, the Commerce Department said.
Chris Rupkey, chief financial economist at Union Bank, said that auto sales still were strong in September and that he was optimistic overall spending would quickly bounce back.
“The future for consumer spending looks bright, with falling gasoline prices putting extra dollars in consumers’ pockets, and for the first time since the recession, we can say it looks like wages are starting to rise,” he said.
Chris G. Christopher Jr., director of consumer economics at IHS Global Insight, also cited falling gas prices, saying they were “a big plus for discretionary spending and consumer mood” entering the year-end shopping season.
Spending probably rebounded in October, and year-end retail sales are expected to be stronger this year than in 2013, he said.
With spending down in September and incomes still rising slightly, Americans saved.
The savings rate rose to 5.6 percent in September, up from 5.4 percent the previous month, the Commerce Department said.
The new data came after the government reported Thursday that the overall pace of economic growth slowed in the August-September period.
Gross domestic product, a broad measure of economic activity, rose at a still-healthy 3.5 percent annual rate after a 4.6 percent increase in the second quarter.
Part of the reason for the decline was a drop in consumer spending.
It increased at an annual rate of 1.8 percent in the third quarter, down from a 2.5 percent annual rate in the second quarter.
Inflation remained low in September, the Commerce Department said.
The personal consumption expenditure price index, the Federal Reserve’s preferred inflation gauge, was up 0.1 percent in September. It had dropped 0.1 percent the previous month.
For the 12-month period ending in September, prices were up 1.4 percent, well below the Fed’s annual target of 2 percent.