The Bureau of Economic Analysis said that personal spending growth rose modestly in October. Consumer spending increased 0.3 percent in October, the sixth straight month of gains in purchasing. The year-over-year pace strengthened from 2.6 percent in September to 2.8 percent in October. Still, it is clear that personal spending growth has decelerated from the 4.1 percent pace average of 2012 to the 3.0 percent average year-to-date in 2013.
Looking specifically at the October data, spending was higher for both durable and nondurable goods, up 0.6 percent and 0.3 percent, respectively.
Meanwhile, personal income fell 0.1 percent in October, the first decline since January. To be fair, however, much of that decrease was attributable to a sharp falloff in farm proprietors’ income. Wages and salaries rose 0.1 percent, and for manufacturers, total wages and salaries totaled $749.2 billion in October, up from $745.9 billion in September. This figure has gradually moved higher, up from averages of $707.1 billion and $735.4 billion in 2011 and 2012, respectively.
The year-over-year pace of personal income has also eased, down from 3.9 percent in September to 3.4 percent in October. Through the first 10 months of the year, the annual pace has averaged 3.3 percent, down from the 4.2 percent rate experienced in all of 2012.
With personal spending outstripping personal income, the savings rate fell from 5.2 percent in September to 4.8 percent in October. Even with the slight decrease, the savings rate has edged higher in general as the year has progressed, with the year-to-date average being 4.6 percent. Nonetheless, the savings rate has generally been lower this year than last, when the saving rate averaged 5.3 percent from January to November 2012. (I omitted December due to accelerated payouts skewing the data in the lead-up to the fiscal cliff deal.)
Chad Moutray is the chief economist, National Association of Manufacturers.