US Personal Income & Spending Growth Slows To A Crawl In Sep

Deceleration weighed on personal income and spending growth for the US last month, according to this morning’s update from the Bureau of Economic Analysis. Consumer spending rose just 0.1% in September vs. the previous month—the smallest rise in eight months. Disposable personal income growth was weak too, rising only 0.1% in September—the weakest gain since April. Consider, too, that private-sector wage growth—the foundation for consumer spending and the US economy in general—just posted its first monthly decline in more than a year. Adding to the gloomy numbers is the sight of the year-over-year comparisons ticking lower as well.

September, in sum, was a weak month for the consumer sector. It’s unclear if this is a one-off event or the start of something more troubling. In any case, the margin of comfort for the consumption and spending trends stumbled last month.

The slowdown in private-sector wage growth is especially conspicuous. The annual pace for workplace earnings slid to a 3.8% increase—the smallest year-over-year gain since Dec. 2013.


“Today’s batch of data releases aren’t going to convince the doves to vote for a December rate hike,” Paul Ashworth, chief U.S. economist at Capital Economics, tells Reuters.

The optimistic view is that slow growth or something slightly better will prevail for the US economy. Meantime, today’s release confirms what was already clear in yesterday’s GDP report: the third quarter ended with a wimper.

With most of the September numbers published, it’s still safe to say that the US macro trend remained positive through Q3, albeit at a sharply diminished rate vs. Q2. Now the attention turns to the kick-off for Q4, starting with next Friday’s employment report for October. For obvious reasons, a disappointing jobs release will raise a new round of troubling questions about the economic outlook. Based on the available figures to date, however, there’s still a convincing case for seeing slow to moderate growth as the likely path. But in the wake of today’s update, the crowd will remain on high alert for clues that suggest otherwise.

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