Commerce Department Reports 0.1% Rise In Spending, Less Than Analysts Forecast
The Commerce Department reports today that consumer spending rose 0.1 percent in October, following a similar gain from August to September. Economists had expected a 0.3 percent increase, the AP reported. Personal incomes rose 0.4 percent, in line with forecasts, on a 0.6 percent gain in wages and salaries, the largest in five months. October’s data marked the “second straight month of spending weakness” and “could signal trouble,” but economists “are counting on the strong labor market to bolster the incomes needed to fuel spending in the months ahead.” With the “growth in incomes and a small rise in spending, the saving rate rose to 5.6 percent of after-tax income in October, up from 5.3 percent in September. It was the highest monthly savings level in nearly three years.” Reuters reported that the two small monthly gains suggests that consumer spending will fall from the 3.0 percent annual pace in the third quarter and is likely to contribute to a rate of growth of about 2 percent for the fourth quarter. Bloomberg News reported that last month, consumers “pocketed most of the savings from the plunge in gasoline prices, pickup in wages and lower heating bills caused by milder-than-usual temperatures, signaling households will remain frugal heading into 2016.”
What This Means For Small Businesses
The latest consumer spending data from the Commerce Department suggests that across the US retail sales are rising, but just barely. In the NFIB’s latest Small Business Economic Trends report, chief economist William Dunkelberg said the organization’s own data found that in October there was “no indication of a resurgence in growth in the small business sector,” and that “weak sales made current stocks look excessive and future sales are not expect to grow much.” He added that “the net percent of owners planning to add to inventory fell 3 points to a net 0 percent, not much help for Q4 GDP growth.”
Additional Reading
The Wall Street Journal also covered the latest Commerce Department data.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.
