In a report released today by the Department of Commerce, personal consumption expenditures, which represents the value of the goods and services purchased by U.S. residents, climbed a seasonally adjusted 0.2% to $24.3 billion in September.
Last month also saw gains in personal income, which rose 0.3% to $50.2 billion, while disposable personal income, or the wages available for either spending or saving, grew 0.3% to $55.7 billion. Additionally, the personal saving rate was 8.3% in September versus the previous month’s 8.1%.
The increases, albeit slight, indicate that American households could be on solid footing ahead of the all-important holiday shopping season. It’s also good news for the retail industry, which is expecting a 3.8% to 4.2% uptick in sales during the period, according to the National Retail Federation’s annual holiday forecast. Spending, it should be noted, accounts for more than two-thirds of the overall economic output.
Further, the numbers offer relief for the sector following a disappointing consumer confidence report published early this week. The Conference Board, which conducts monthly assessments of consumers’ opinions on current economic conditions and future expectations, noted a drop in the consumer confidence index from September’s 126.3 to 125.9 this month. Earlier, analysts polled by Dow Jones had forecast a reading of 128, and it marked the lowest record since June when consumer confidence slid to 124.
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“There is significant economic unease, but current economic data and the recent momentum of the economy show that we can expect a much stronger holiday season than last year,” said NRF chief economist Jack Kleinhenz this month. “Job growth and higher wages mean there’s more money in families’ pockets, so we see both the willingness and ability to spend this holiday season.”
During the third quarter, the Commerce Department reported that the U.S. economy improved at a 1.9% annual rate, assisted by the lowest unemployment rate in nearly half a century. Over the past couple of months, American businesses and consumers have been impacted by trade tensions between the U.S. and China, coupled with a slowdown in hiring and a jittery stock market.
Consumer Confidence, Sentiment and Spending Are All on the Rise — but Why Aren’t Retailers Reaping the Benefits?