Consumer spending in the U.S. unexpectedly dropped in September as incomes rose at the slowest pace of the year, indicating the economy will have difficulty sustaining a pickup in growth into the end of the year.
The labor market has shown signs of strength this year, with employers adding more than 200,000 jobs for the last six months -- the first time that’s happened since 1997. Payrolls grew by 209,000 last month, while the unemployment rate rose to 6.1 percent as more people entered the labor force.
Stronger demand for goods and services is prompting companies to hold the line on firings and expand headcount. Continued progress in the labor market will be needed to boost aggregate income and drive consumer spending, which accounts for almost 70 percent of the economy.