U.S. Personal Spending Falls 0.5%; Incomes Drop 0.1%

[bemildred]

Sept. 30 (Bloomberg) -- U.S. consumer spending fell in August by the most in more than three years, led by a slump in automobile purchases, and may keep dropping as Americans pay record gasoline prices in the wake of the hurricanes. Incomes unexpectedly dropped because of uninsured property losses after Hurricane Katrina.

The 0.5 percent decline in spending followed a revised 1.2 percent gain in July, the Commerce Department reported today in Washington. The drop in spending was the biggest since May 2002. Incomes fell 0.1 percent, the first decline since January, after a 0.3 percent increase the previous month.

Uninsured property losses from Katrina reduced personal income by about $100 billion, Commerce said. The slump in spending may spread beyond autos this month as Americans forgo nonessential purchases, such as visiting restaurants or buying clothes, to pay soaring fuel bills, economists said. Consumer confidence fell by the most in 15 years this month after Hurricane Katrina devastated the Gulf Coast and pushed gasoline prices to a record.

``This was bad, but September is going to be terrible,'' said Christopher Low, chief economist at FTN Financial in New York. ``Consumers are clearly shaken badly by the storm.''

Bloomberg

[liberal N proud]

1. This was before a massive hurricane hit the Gulf Coast

However, mark my words, the bu$h regime and all their little loyalist will claim Katrina for fault of the downturn in the already flagging economy!

[TheCowsCameHome]

2. Impossible. Everything is coming up roses, according to the RW shills.

[On the Road]

3. It is Highly Unusual

for the market to be flat on the last day of a month.