Consumer Spending Dips In September

October 31, 2008 4:31 p.m. EST

Washington, DC (AHN) - Data released by the Commerce Department on Friday showed September consumer spending fell 0.3 percent, more than the 0.2 percent pullback economists had expected as consumers tighten their wallets.

The drop in September consumer spending was the largest decline since June 2004. The drop also puts consumer spending for the third quarter down 0.3 percent as the past two months have seen flat spending.

Consumer spending represents roughly two-thirds of gross domestic product (GDP). The impact of the spending slowdown became clear yesterday when the Commerce Department said its first reading of third quarter GDP was down 0.3 percent.

On a positive note, the Commerce Department said personal income rose 0.1 percent in September, in-line with economists expectations.

Personal income is measured by total income from wages and salaries along with income received from interest and dividend payments. The gauge usually moves in tandem with personal spending since many jobs are tied to it, any positive deviation, such as this month is viewed as a strong result.