WASHINGTON (AP) — The Commerce Department reports on how much consumers spent and earned in September. The report will be issued at 8:30 a.m. EST Friday.
SPENDING UP: The forecast is that spending rose 0.2 percent after rising 0.3 percent in August, according to a survey by FactSet. Income is expected to be up 0.3 percent after a 0.4 percent gain in August. That gain, while modest, was still the fastest income gain in six months.
WEAK SPENDING AND INCOME GROWTH: Spending and income growth have been weak for much of this year. The August figures suggested only modest economic growth in the July-September quarter.
WHY IT MATTERS: Consumer spending accounts for 70 percent of economic activity.
The government reported Thursday that the overall economy grew at an annual rate of 2.8 percent in the July-September quarter but the rate of spending gain was slower in the third quarter than the first.
Spending grew at a 1.5 percent rate in the third quarter, down from a 1.8 percent increase in the second quarter. The third quarter performance was the slowest in two years although spending activity was held back by services spending which was basically flat. That reflected a cooler summer which held down spending on electric utility bills.
Spending on goods, both durable goods such as autos and nondurable goods such as clothing, grew at a rate of 4.3 percent, the best showing since early 2013.
Economists, however, are concerned that the overall economy will slow in the current October-December period in part because consumers are expected to cut back on their purchases because of the uncertainty caused by the 16-day partial government shutdown.
Many are forecasting that growth will slow to between 1.5 percent and 2 percent this quarter.
The Conference Board reported that Americans' confidence in the economy fell in October to the lowest level since April as many people worried about the impact of the shutdown. Consumer confidence has dropped in three of the four months since June.
Falling confidence can cause Americans to spend less, which would be a blow for the economy, especially as retailers' all-important holiday shopping season gets under way.
Part of the reason for the fall in confidence has been weaker job growth. Employers added an average of just 143,000 jobs a month from July through September. That was down from 182,000 a month from April through June.