WASHINGTON – U.S. consumer spending rose by an inflation-adjusted 0.3 per cent in September, led by increased spending on health care services and motor vehicles.
The Commerce Department also said Monday that the Federal Reserve’s preferred measure of inflation returned to the central bank’s 2 annual per cent target after having been slightly elevated in prior months. In addition, personal incomes rose 0.2 per cent in September – the smallest gain since June 2017. Roughly half of that increase was wiped out by inflation.
Consumer spending accounts for the majority of U.S. economic activity, and it was the key driver of overall growth during the July-September quarter. The economy climbed at an annual rate of 3.5 per cent in that quarter, helped by the strongest jump in consumer spending in about four years, the Commerce Department said Friday.
But economic growth slowed from a 4.2 per cent gain in the second quarter as the pace of business investment fell and continued growth may depend even more on consumer spending.
The Fed’s preferred inflation metric – personal consumption expenditures – found that prices ticked up just 0.1 per cent in September.
The personal savings rate slipped to 6.2 per cent in September, the lowest level in 2018.