by Americans continue to spend, but they are paying higher prices for what they buy.
Consumer spending rose 0.6% in September, as Americans saw their personal income fall 1%, But a key inflation gauge rose more than expected at an annual rate of 4.4%, the Commerce Department reported on Friday.
SITE:
SITE: https://www.drupal.org/files/issues/2021-10-30/VOIR-VF%20Op%C3%A9ration%20Portugal%20STREAMING-VF%20FILM%20COMPLET%20VOSTFR%2011%2030%202021.pdf
SITE: https://www.drupal.org/files/issues/2021-10-30/VOIR-VF%20Pleasure%20STREAMING-VF%20FILM%20COMPLET%20VOSTFR%2011%2030%202021.pdf
SITE: https://www.drupal.org/files/issues/2021-10-30/VOIR-VF%20The%20French%20Dispatch%20STREAMING-VF%20FILM%20COMPLET%20VOSTFR%2011%2030%202021.pdf
SITE: https://www.drupal.org/files/issues/2021-10-30/VOIR-VF%20After%20-%20Chapitre%203%20STREAMING-VF%20FILM%20COMPLET%20VOSTFR%2011%2030%202021.pdf
SITE: https://www.drupal.org/files/issues/2021-10-30/VOIR-VF%20Venom%202%20Let%20There%20Be%20Carnage%20STREAMING-VF%20FILM%20COMPLET%20VOSTFR%2011%2030%202021.pdf
SITE: https://www.drupal.org/files/issues/2021-10-30/VOIR-VF%20Bac%20Nord%20STREAMING-VF%20FILM%20COMPLET%20VOSTFR%2011%2030%202021.pdf
[ MORE: 3Q GDP Growth Falls to 2% as Consumers Pull Back ]
Recommended Videos
Powered by AnyClip
Biden hopes to reach spending deal this week
10.1K
1
Play Video
Biden hopes to reach spending deal this weekNOW PLAYING
Biden hopes for spending deal this week
Biden unveils new spending plan, some Dems push back
U.S. consumer spending rises solidly in September
‘We will own the future’ -Biden on spending plan
The spending and inflation numbers were in line with expectations, but the drop in income was larger than expected and may reflect the ending of federal stimulus programs.
While the headline inflation number was up from August’s 4.2% rate, the index excluding often-volatile food and energy was unchanged at 3.6%. Both are well above the Federal Reserve Board’s stated goal of 2% annual inflation.
“The $93.4 billion increase in current dollar (spending) in September reflected an increase of $63.6 billion in spending for services and a $29.9 billion increase in spending for goods,” the report said. “Within services, the largest contributors to the increase were spending for health care as well as food services and accommodations. Within goods, an increase in spending for nondurable goods was partly offset by a decrease in durable goods.”
Political Cartoons on the Economy
View All 388 Images
Although consumers have plenty of money to spend, with savings accumulated during the coronavirus pandemic, they are facing shortages of many goods.
On Thursday, the government reported an anemic 2% growth in the annual rate of the nation’s gross domestic product, constrained by weak consumer spending.
“Real consumer spending was soft, increasing at only a 1.6% rate following a 12% growth rate in Q2,” Comerica Chief Economist Robert Dye wrote Thursday. “Lack of inventories for automobiles and other durable goods products held consumer and business spending back.”
Various measures of consumer sentiment show that the economy faces a tug between strong demand and labor and materials shortages. As a result, prices are rising with inflation running at an annual rate of more than 5%.
This dichotomy puts the Fed’s monetary policy committee in a bind as it meets next week with expectations that it will formally detail its plans to cut back on its $120 billion per month purchase of Treasuries and mortgage-backed securities. Economists expect the central bank to trim some $15 billion a month from those purchases, beginning late next month or early December and continuing through the middle of next year.
[ MORE: How High Will 3Q GDP Be? It’s Anyone’s Guess ]
“The GDP number does not really change our thinking” about the Fed, says Wilmington Trust Chief Economist Luke Tilley. “A lot of the weakness in GDP was expected. They have met the markers they set out.”
Meanwhile, companies seem to be navigating the challenges of not having enough workers or key parts, with a number of iconic names like Coca-Cola, McDonald’s and General Motors posting robust third-quarter earnings in recent days. However, some well-known tech companies, such as Amazon and Apple, did not do as well as expected and cited supply chain disruptions for their underperformance.
Further muddying the picture is the status of President Joe Biden’s dual $1 trillion infrastructure and $1.75 trillion social spending proposals, which sit precariously before Congress. Biden had hoped to have closure on his signature proposals before he left Thursday for a summit of major powers, a meeting with the pope and attendance at a climate confab in Glasgow.
Progressives in the House were able to block a vote Thursday on the infrastructure package, but negotiators continue working with an eye toward getting the plan through next week.
Tags: consumers, economy, Commerce Department, United States
