November 8, 2017
Transport Topics --- Consumers boosted their spending by 1% in September, the biggest monthly gain in eight years. Strong sales of autos and other durable goods led the surge.
The sizable jump in consumer spending was up from a tiny 0.1% gain in August and was the best showing since an increase of 1.3% in August 2009, the Commerce Department reported. Income growth was also solid in September, rising by 0.4% as wages and salaries climbed.
Consumer spending is closely monitored because it accounts for 70% of economic activity. The latest result suggests that Americans were feeling increasingly confident about the economy at the end of the third quarter.
That should boost growth in the final three months of the year. The overall economy, as measured by the gross domestic product, grew at a solid 3% annual rate in the July-September quarter, despite the devastation from two hurricanes. It was the first time in three years the economy posted back-to-back quarterly gains of 3% or better.
The big surge in spending in September was led by a 14.7% increase in spending for new motor vehicles, as drivers replaced the estimated more than 300,000 vehicles destroyed in the hurricanes.
Consumer confidence has been bolstered by a Wall Street rally, which has pushed stocks to new highs. Economists said spending would get additional support next year if Republicans are able to push their tax cut package through Congress, and the cuts are made retroactive to the start of 2018.