WASHINGTON — Americans increased their spending in September at twice the rate their income rose, a sign of confidence in the economy.
The Commerce Department said Monday that consumer spending increased 0.8 percent in September. That followed a 0.5 percent gain in August and was the best showing since February. Personal income rose 0.4 percent, an improvement from a slight 0.1 percent gain in August and the best gain since March.
Consumer spending is important because it drives nearly 70 percent of economic activity.
A pickup in consumer spending helped lift economic growth in the July-September quarter to a 2 percent annual rate. While that is faster than the 1.3 percent rate in the April-June period, it’s still too weak to create enough jobs to rapidly lower the unemployment rate.
The spending gains reflect in part rising consumer confidence. The University of Michigan reported Friday that its final consumer sentiment index for October had hit a five-year high. Falling gas prices and a slightly better job market were credited with lifting consumers’ outlook.
With eight days until the election, the economy is being kept afloat by a revitalized consumer and the early stages of a housing recovery. But the nation continues to struggle because businesses are reluctant to invest, and slower global growth has cut demand for American exports.
Republican nominee Mitt Romney is telling voters that President Barack Obama’s policies have kept the economy from accelerating.
Obama says his policies helped to stabilize the economy after the worst downturn since the Great Depression. He says the economy is slowly recovering under his administration and that Romney is advocating policies that would undo that progress.
The unemployment rate fell to 7.8 percent last month, the first time it has been below 8 percent since January 2009, the month Obama took office.