September Consumer Spending Rises 0.5% Following August Decline
The latest Commerce Department data shows US consumer spending rose 0.5% in September, while US personal income also increased for the month, up 0.3%. Reuters reports that September’s consumer spending increase comes after spending fell 0.1% in August. September spending increased more than the 0.4% increase economists had expected “as households boosted purchases of motor vehicles and inflation increased steadily, which could bolster expectations of an interest rate hike from the Federal Reserve in December.” Reuters notes that this latest report comes a day before the Federal Reserve begins its November policy meeting. However, analysts still expect the Fed to leave interest rates stable until the December meeting. Bloomberg News quotes Ameriprise Financial senior economist Russell Price as taking a cautiously upbeat view of the US Commerce Department’s Monday report, as September’s consumer spending increase was the largest in three months. Price is quoted saying, “As long as we continue to see employment growth and wage growth, that’ll put more money in people’s pockets and give them the ability to spend at a faster pace.”
What This Means For Small Businesses
The NFIB’s latest Small Business Economic Trends report shows that optimism is continuing to decline among small business owners. Much of this uncertainty centers around reports of continued economic stagnation. While the latest data showing an increase in consumer spending is welcome, as it shows there might be some progress on meaningful economic recovery, it remains to be seen whether this boost in consumer spending is sustainable to the point that it can help drive small business growth.
The Wall Street Journal also covers the latest consumer spending 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.