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November 1, 2010    

US consumer spending rises 0.2% in September

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by Kay Murchie

According to the Commerce Department, consumer spending in the US rose by 0.2% in September, after increasing by 0.5% the previous two months.

The figures suggest consumers are tightening their purse strings despite very low prices.

Consumer spending makes up for more than two-thirds of overall economic activity in the US.

Meanwhile, personal incomes saw an unexpected fall in the month.

Incomes fell by an annualised 0.1% in September and followed a 0.4% rise in August. It was the first fall in incomes since July 2009.

The report also showed the national savings rate fell from 5.6% in August to 5.3% in September.

In the meantime, a consumer confidence index, published last week, revealed US citizens are cautious about a weak jobs market and the economic recovery.

However, the US central bank, the Federal Reserve, is this week expected to provide extra stimulus to strengthen the economy, when it meets this week.

The US central bank looks as if it will adopt measures to safeguard the recovery after minutes of the 21 September meeting said the Federal Open Market Committee (FOMC) was “prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.”

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