WASHINGTON — American consumer spending fell in September for the first time in eight months, the Commerce Department reported today, and economists said the slumping stock market means that a further slowdown is in store.
Although personal income rose a strong 0.7%, or $25.4 billion, spending fell 0.5%, or $16.1 billion, as consumers bought fewer cars, the government said.
Purchases of durable goods, which include autos, fell $14.1 billion, reversing a buying binge on cars in August that had boosted total consumer spending by a revised 1.7%. The increase was originally reported as 1.5%.
The combination of rising incomes and falling purchases pushed Americans' savings rate, savings as a percentage of disposable income, to 3.3% from a historic low of 2.2% in August.
First Since January
Financial analysts had anticipated a slowdown in auto sales as buyers held back waiting for new models and financing incentives, but they had expected overall spending to drop no more than 0.2%.
The fall was the first since January, when spending fell 1.6%, and financial analysts are predicting further retrenchment because of the hundreds of billions of dollars of wealth that have been wiped out by the stock market crash.
"We all know what's happened in the first 20 days of October," said Allan Leslie, an economist with Discount Corp., a New York securities firm. "Unless things really pick up, it presages very weak consumer spending."
President Reagan warned last week that the economy could be tipped into a recession if consumers put off too many purchases, but his chief economic adviser took a more sanguine view today.
Beryl W. Sprinkel, chairman of the White House Council of Economic Advisers, said on NBC's "Today" program that the Administration is not concerned about a recession.
"I think there is some reason to believe that there will be some slowdown in total spending," Sprinkel said, but "we're not concerned about a recession."
"But when you lose a half trillion dollars in the marketplace, this is likely to encourage consumers to spend at a smaller clip. Also it might have some effects on capital spending," he said.
The Commerce Department said the 0.7% gain in personal income in September was the largest since February, when income rose 1.1%.
The rise in income followed a 0.6% gain in August.
Farm income increased $4.4 billion in September after falling $6.6 billion in August. The swings in both months were attributed to federal subsidy payments.