US consumer spending climbed 0.6 per cent as expected in September and inflation remained benign, government data showed today, as shoppers splashed out after showing restraint the previous month.
Personal income climbed 0.2 per cent after a 0.3 per cent gain in August. August's increase had initially been reported as a 0.4 per cent rise.
"You draw a trend line and you see that consumer spending remains on a nicely ascending slope," said Mr Ken Mayland, president of Clearview Economics.
Some economists were worried by the tepid growth in disposable income and said this underlined the need for the US economy to lift the pace of employment growth.
"The very mediocre growth by personal income of the past two months brings attention to how the sub-par pace of job creation threatens to significantly slow consumer spending," said Mr John Lonski, chief economist at Moody's Investors Service.
Stripping out the effects of inflation and taxes, the Commerce Department said real disposable income was unchanged in September, compared with a revised 0.2 per cent rise in August, initially reported as up 0.4 per cent.
The Fed meets on November 10th and is expected to raise interest rates by a quarter percentage point to 2.0 per cent at either this gathering or in December, in line with its forecast for steady economic expansion.
GDP data released on Friday showed consumers contributing solidly to the 3.7 per cent growth recorded by the US economy in the third quarter.
But analysts worry record oil prices will take a bite out of household budgets as soaring energy costs discourage spending as the colder winter months approach. Spending on durable goods, which includes costly items like cars, increased 1.6 per cent after August's 2 per cent fall.
Non-durable spending advanced 0.5 per cent after gaining 0.2 per cent the previous month.
The Commerce Department also said the September level of personal savings of $14.3 billion and the personal saving rate of 0.2 per cent were the lowest since October 2001 in the aftermath of suicide airplane attacks on US cities.