LITTLE ROCK — Consumer spending in the U.S. accelerated in September, the Commerce Department reported Friday, helping the world’s largest economy skirt a recession.
Purchases increased 0.6 percent after a 0.2 percent gain the previous month. Incomes rose less than projected, sending the savings rate down to the lowest level in almost four years.
A pickup in consumer spending helped propel the economy through the third quarter. Without a pickup in wages, households may be unable to maintain gains in purchases.
“Given the state of consumer sentiment and the savings rate, we should see moderate spending, at best, going forward,” said Sean Incremona, a senior economist at 4Cast Inc. in New York. “The savings rate is just one of those warning signs that says we’re not pulling ourselves out vigorously, so the economy still has a lot of vulnerability.”
Incomes rose 0.1 percent last month after dropping 0.1 percent in August. Wages and salaries climbed 0.3 percent in September after falling 0.1 percent a month earlier. A 1.4 percent plunge in interest income limited the overall gain.
The savings rate fell to 3.6 percent in September, the lowest since December 2007, according to the Commerce Department report.
“Income growth will have to be watched closely in coming months as the recent trend of spending at the expense of savings is not sustainable,” economists at Nomura Securities wrote.
“Consumers have hit a level of saturation in their savings,” said Marshal Cohen, chief industry analyst with market research firm The NPD Group. “The propensity is to spend.”
Paul Ashworth, chief U.S. economist at Capital Economics, said the less-in-savings trend could mean more spending by Americans. But it will take robust personal spending - along with improvement in the depressed housing market - to get the economy going again.
Ashworth said his firm is not too concerned with the decline in savings because it partly represents “a sharp decline in debt servicing costs.” In other words, low interest rates mean it’s cheaper to borrow money.
The report also showed inflation cooled. The Fed’s preferred price gauge, which excludes food and fuel costs, was little changed in September from the previous month after rising 0.2 percent the month before. It was projected to rise 0.1 percent, according to the median forecast of economists surveyed. It was up 1.6 percent over the past 12 months, down from a 1.7 percent gain in the year ended in August.
Friday’s numbers provide a monthly breakdown of the quarterly data released Thursday by the Commerce Department that showed the U.S. economy grew in the third quarter at the fastest pace in a year. Gross domestic product expanded at a 2.5 percent annual rate, up from 1.3 percent in the three months before.
Household purchases, the biggest part of the economy, rose at a 2.4 percent pace, contributing 1.7 percentage points to growth.
Auto purchases picked up in September as manufacturers restored output on receding disruptions from Japan’s earthquake and tsunami. Cars and light trucks sold at an average 13 million annual rate last month, up from a 12.1 million pace in August.
President Barack Obama and the Federal Reserve still face pressure to spur employment needed to support further household spending.The president earlier this week said that he is seeking ways to take action without congressional approval after the Senate blocked his $447 billion plan to create jobs.
In recent months, job growth has stagnated. Employers have added an average of only 72,000 jobs per month in the past five months. That’s far below the 100,000 per month needed to keep up with population growth. And it’s down from an average of 180,000 in the first four months of this year.
Employers added only 103,000 jobs in September, and the unemployment rate remained 9.1 percent for a third-straight month.
The government will release the October employment report Friday.
Information for this article was contributed by Alex Kowalski and Chris Middleton of Bloomberg News, by Martin Crutsinger and Christopher S. Rugaber of The Associated Press, and by Jeffry Bartash of MarketWatch.
Front Section, Pages 1 on 10/29/2011