US consumer spending falls as income growth stalls

Customers shop at the newly opened J.C. Penney store at the Gateway Center Mall in Brooklyn, the retail company's first Brooklyn store on August 29, 2014 in New York City (AFP Photo/Spencer Platt)

Washington (AFP) - US consumer spending fell in September after a surge in August as personal income growth slowed to a crawl, the Commerce Department reported Friday.

Consumer spending, which accounts for the bulk of US economic activity, fell 0.2 percent in September after a 0.5 percent rise in August.

It was the first decline in spending this year since January, when consumer outlays also fell 0.2 percent amid harsh winter weather.

Personal income increased only 0.2 percent from the previous month, the weakest rise since December 2013.

Disposable personal income edged up 0.1 percent, the smallest increase since early this year.

The savings rate climbed two-tenths of a percentage point to 5.6 percent in September -- the highest level since December 2012.

The personal consumption expenditures price index, the Federal Reserve's preferred inflation measure, ticked up 0.1 percent after a decline of 0.1 percent August.

Stripping out volatile food and energy, core PCE prices rose 0.1 percent.

Year-over-year, PCE prices were up 1.4 percent and core prices rose 1.5 percent, well below the Fed's target of 2.0 percent annually.

The lackluster report came a day after the Commerce Department estimated third-quarter economic growth at a solid annual rate of 3.5 percent, despite a slowdown in consumer spending, as higher exports and defense spending boosted activity.

During the July-September quarter, consumer spending rose a tepid 1.8 percent from the year-ago quarter, down from a 2.5 percent gain in the second quarter.