September sees drop in consumer spending

10.30.09
By Nicholas Storie

Though the economy seems to be improving, consumers are still pulling back on spending, which is an indication they may be concentrating on debt management.

According to a recent report from the Commerce Department, consumer spending fell by 0.5 percent in September, which marks the first decline it has seen in months. When adjusted for inflation, consumer spending fell 0.6 percent. Consumer spending had climbed by 1.4 percent in August.

Many analysts are connecting the drop in spending with the end of the government's cash-for-clunkers program, which spurred auto purchases.

"The consumer spending data was largely in line with what was forecast," Peter Jankovskis, an investment officer at Lisle, Illinois' Oakbrook Investments, said in a Reuters report. "The fact that September held up well after end of the cash-for-clunkers program is a good sign."

Though consumer spending was down for the September, people getting out and spending was tied to growth in the country's gross domestic product in the third quarter. GDP grew by 3.5 percent in the third quarter, indicating to some experts that the largest recession since World War II has come to an end.

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Consumers kept a closer hold on their money in September.