Americans' consumer spending jumped 1.1 percent in September, the government said Wednesday, outpacing a 0.5 percent growth in personal income and contributing to the lowest savings rate in three years. The Commerce Department report "shows consumer purchasing power obviously is under intense pressure in the aftermath of the (Persian Gulf) oil shock," said Stephen S. Roach, senior economist with Morgan Stanley & Co.
Nevertheless, Roach added, "Consumers are really sort of clinging tenaciously to their lifestyles. Their spending is holding up just fine."
The report said Americans' incomes reached a seasonally adjusted annual rate of $4.7-trillion in September, a $23.8-billion increase over August.
At the same time, it said spending reached a rate of $3.73-trillion, up $39.9-billion from a month earlier. It was the biggest increase since June.
The report said the rate of Americans' savings as a percent of disposable income fell to 3.5 percent, down from 4.1 percent in August and the lowest since a 3.3 percent rate in October 1987.
The report said income after taxes increased 0.4 percent, up from a 0.2 percent gain in August.
The spending and income figures were not adjusted for inflation. When adjusted, spending rose 0.3 percent after declining 0.1 percent in August. Disposable, or after-tax, income fell 0.3 percent on top of a 0.5 percent drop the previous month.