Consumer spending drops as income stalls

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Consumers spent less in October, as income growth stalled.

The Commerce Department reported Friday that consumer spending fell 0.2% after an 0.8% jump in September. It was the first decline in spending since May. Personal income was unchanged after rising 0.4% in September.

Consumer spending accounts for more than two-thirds of the nation's economy, so the pullback could be a worrisome sign.

The spending jump in September had been partly driven by higher gas prices, strong car sales, as well as the introduction of the new iPhone, which sparked a jump in spending on electronics.

But the big increase in spending in September was also accompanied by a drop in the personal savings rate, which is a concern for economists. The savings rate did rise modestly in October though, to 3.4%.

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Gas prices retreated in October, cutting what consumers needed to spend at the pump. Hurricane Sandy also hit overall retail sales, particularly car sales, at the end of the month.

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