US consumer spending picked up in September

US consumer spending picked up pace in September, sustaining a three month surge that also represents a downturn in household saving, the Commerce Department reported Monday.

Personal consumption expenditures last month rose 0.8 percent, or $87.9 billion, to $11.25 trillion, after an 0.5 percent pickup in August. Higher gasoline prices contributed partly to the rise.

But because disposable incomes only rose 0.4 percent, households cut savings to fuel the rise in spending.

Savings totaled $395 billion in September, compared to $445 billion a month earlier, bringing the average saving rate down to 3.3 percent of income.

Jim O'Sullivan at High Frequency Economics said the consumption remains feeble.

"For the quarter as a whole, real consumption rose at a 2.0 percent annual rate, which is not very strong" though an improvement from the second quarter.

"More concerning is the weak 0.8 percent pace for real disposable income in Q3," he said.

"In short, while real spending finished Q3 strongly, still-weaker income data will keep alive doubts about sustainability."

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