Consumers earn, save less but spend more

WASHINGTON – The savings rate for U.S. households fell to its lowest level in 13 months in September as incomes showed an unexpected decline, the Commerce Department estimated Monday.

Personal incomes slipped 0.1 percent in September, one month after incomes were boosted a strong 0.4 percent by unemployment compensation. This marked the largest decline for incomes since July 2009.

At the same time, consumer spending increased a seasonally adjusted 0.2 percent after an upwardly revised 0.5 percent gain in August.

Economists had been looking for increases of 0.2 percent for income and 0.3 percent for spending in September.

With spending rising faster than incomes, the personal savings rate fell to 5.3 percent of disposable income, down from 5.6 percent in August. It was the lowest savings rate since August 2009.

Steve Ricchiuto, Mizuho Securities’ chief U.S. economist, said the drop in the savings rate suggested little upside for spending in the months ahead.

“The economy just doesn’t have upside momentum,” Ricchiuto said, citing consumers struggling to repair their finances as just not having sufficient extra money to spend.

Over the past three months, real spending has grown at a 2.6 percent annualized pace, while real disposable incomes have fallen 0.9 percent on the same comparison. The savings rate has fallen from 6 percent in June.

Some economists have been wondering whether the savings rate will return to levels in the 9 percent to 10 percent range seen during another economically trying period: the early 1980s.

Wages and salary income, the key for consumer spending, was flat in September after having risen 0.2 percent in August.

Adjusted for inflation, personal consumption rose 0.1 percent in September.