Consumer Spending Fell in September

A new report issued by the Commerce Department has shown that average consumer spending fell in September for the first time in five months, a development that has been attributed to the ending of the Cash for Clunkers automotive rebate program. This drop in consumer spending matching analyst estimates and follows a 1.4 percent jump in the previous month.

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Consumer confidence has taken a hit in recent months because of stagnant wages and growing unemployment, two factors that have raised worries that consumers will cut back spending in the coming months.

Analysts also worry that consumers will grow reliant on government programs, holding onto their money when no such programs are available.

These figures have caused analysts to predict that consumers will spend less aggressively going into the holiday season, which may prove to be disastrous for retailers that rely on strong holiday sales to get through the rest of the year. However, inflation did not rise as much as expected, which is a relief to policymakers.