Are Americans returning to their profligate spending ways?
Some may be asking that question after the latest government report showed consumer spending in September rose by a surprisingly robust 0.6%, even as personal incomes barely grew over the month. And adjusting for inflation, after-tax income in September actually fell by 0.1%, the Commerce Department reported Friday.
Put all that together and you get a sharp drop in the saving rate last month, to 3.6%. That's the lowest level since 2007 and a drop from about 5% to 6% during most of the last two years.
Scott Hoyt, who studies consumer spending for Moody's Analytics, says it's possible that the September consumption number may have been inflated by a burst of expenditures for repairs and other things after Hurricane Irene in late August. Yet other data suggest that people are spending more as lenders have loosened up a bit on credit and as households, which had put off buying new cars and other goods, feel a little better about where the economy is headed.