Sandy slowed US consumer spending and pay in Oct. - New York News

Sandy slowed US consumer spending and pay in Oct.

Posted: Updated:

WASHINGTON (AP) -- Americans cut back on spending last month while their income remained flat. The weakness in part reflected disruptions from Superstorm Sandy that could slow economic growth for the rest of the year.

The Commerce Department said Friday that consumer spending dropped 0.2 percent in October. It was the weakest figure since May, and it compared with a 0.8 percent spending increase in September.

Income had risen 0.4 percent in September.

Work interruptions caused by the storm reduced wages and salaries in October by about $18 billion at an annual rate, the government said. The storm affected 24 states, with the most severe damage in New York and New Jersey.

Consumers may also be scaling back on spending because of fears about the "fiscal cliff." That's the name for automatic tax increases and spending cuts that will take effect in January if Congress and the Obama administration fail to strike a budget deal by then.

"The upshot is that although both incomes and spending will probably bounce back in November, the underlying trend is weak," said Paul Dales, senior U.S. economist at Capital Economics.

The depressed spending figures suggest that the economy is growing more slowly in the October-December quarter than it did in the July-September quarter. Consumer spending drives nearly 70 percent of economic activity.

Dales predicts U.S. economic growth will tumble from the 2.7 percent annual rate in the July-September quarter to a weak 1 percent in the October-December period. That's too low to lower the unemployment rate, now at 7.9 percent.

Even discounting the effects of Sandy, income and spending gains would have been meager. Income would have risen a still-weak 0.1 percent. Spending would have been essentially flat.

After-tax income adjusted for inflation fell 0.1 percent in October. And spending, when adjusted for inflation, dropped 0.3 percent -- the biggest such decline in three years.

The saving rate edged up slightly to 3.4 percent of after-tax income in October, compared with 3.3 percent in September.

Many economists say growth will rebound in the New Year once the rebuilding phase begins in the Northeast.

And if President Barack Obama and Congress can reach a budget deal to avert to fiscal cliff, some economists, including Federal Reserve Chairman Ben Bernanke, are predicting a strong year for the economy.

Still, the storm's impact has slowed sales in the nation's most densely populated region ahead of the crucial holiday shopping season.

The International Council of Shopping Centers said 18 major retailers reported sales rose 1.7 percent in November compared with the same period a year ago. The group had been expecting sales growth between 4.5 percent and 5.5 percent.

The economic damage from the storm may be starting to fade, though. Retailers are reporting solid sales over the Thanksgiving Day holiday weekend.

And applications for unemployment benefits have fallen from an 18-month high in the first week of November. That surge was driven by applications in New York, New Jersey, Pennsylvania and Connecticut.

Still, the increase in unemployment applications earlier this month will likely depress job growth for November. Many economists predict that net job growth for November will range between 25,000 and 75,000 -- well below the 171,000 jobs that were added in October.

  • Your MoneyMore>>

  • Business is good at Coney Island

    Business is good at Coney Island

    Friday, August 29 2014 10:22 PM EDT2014-08-30 02:22:32 GMT
    From the brand-new Thunderbolt roller coaster to the world-famous boardwalk, tourists and business owners alike say Coney Island had a great ride of its own this summer. Toms Coney Island's general manager Vasilios Tourlokas says the mild summer impacted his boardwalk business in the best way possible: a 10 to 15 percent increase.
    From the brand-new Thunderbolt roller coaster to the world-famous boardwalk, tourists and business owners alike say Coney Island had a great ride of its own this summer. Toms Coney Island's general manager Vasilios Tourlokas says the mild summer impacted his boardwalk business in the best way possible: a 10 to 15 percent increase.
  • NYC Denny's features $300 breakfast

    NYC Denny's features $300 breakfast

    Friday, August 29 2014 4:04 PM EDT2014-08-29 20:04:13 GMT
    Diner chain Denny's is opening it's first New York City location, complete with a big-city "deal".   How does a $300 breakfast sound?    The Denny's is located at the corner of Nassau and Spruce in Lower Manhattan's Financial District.  Along with its normal food you can get at just about any location in the rest of the country, this location will offer a Grand Slam breakfast with a bottle of 2003 Dom Perignon champagne.
    Diner chain Denny's is opening it's first New York City location, complete with a big-city "deal".   How does a $300 breakfast sound?    The Denny's is located at the corner of Nassau and Spruce in Lower Manhattan's Financial District.  Along with its normal food you can get at just about any location in the rest of the country, this location will offer a Grand Slam breakfast with a bottle of 2003 Dom Perignon champagne.
  • Some Showboat workers get new jobs within company

    Some Showboat workers get new jobs within company

    Friday, August 29 2014 2:54 PM EDT2014-08-29 18:54:36 GMT
    More than 470 of the 2,000-plus workers at Atlantic City's Showboat Casino Hotel have found new jobs with other casinos owned by its parent company. The Showboat is shutting down Sunday afternoon after 27 years on the Boardwalk.
    More than 470 of the 2,000-plus workers at Atlantic City's Showboat Casino Hotel have found new jobs with other casinos owned by its parent company. The Showboat is shutting down Sunday afternoon after 27 years on the Boardwalk.
  • Local NewsLocal NewsMore>>

  • Friday Night Live: August 29, 2014

    Friday Night Live: August 29, 2014

    Friday, August 29 2014 11:14 PM EDT2014-08-30 03:14:33 GMT

    This is Fox 5's Friday Night Live, a weekly celebration of the end of the work week. All summer long, the Fox 5 team brings you the latest in entertainment, nightlife, food, and music in our area. In this jam-packed episode: Electric Zoo Festival, Beth Shak, Richard Albrecht, Kathy Wakile, and Moses Laboy .

    This is Fox 5's Friday Night Live, a weekly celebration of the end of the work week. All summer long, the Fox 5 team brings you the latest in entertainment, nightlife, food, and music in our area. In this jam-packed episode: Electric Zoo Festival, Beth Shak, Richard Albrecht, Kathy Wakile, and Moses Laboy .


  • Cocktails with Moses Laboy

    Cocktails with Moses Laboy

    Friday, August 29 2014 10:49 PM EDT2014-08-30 02:49:46 GMT
    Mixologist Moses Laboy came to Friday Night Live to mix up some cocktails to get us started on the holiday weekend. Born and raised in Spanish Harlem, Laboy has mixed drinks at Red Rooster, Los Americanos, Le Colonial NYC, and elsewhere. He has served drinks to President Obama and President Clinton.
    Mixologist Moses Laboy came to Friday Night Live to mix up some cocktails to get us started on the holiday weekend. Born and raised in Spanish Harlem, Laboy has mixed drinks at Red Rooster, Los Americanos, Le Colonial NYC, and elsewhere. He has served drinks to President Obama and President Clinton.
  • Business is good at Coney Island

    Business is good at Coney Island

    Friday, August 29 2014 10:22 PM EDT2014-08-30 02:22:32 GMT
    From the brand-new Thunderbolt roller coaster to the world-famous boardwalk, tourists and business owners alike say Coney Island had a great ride of its own this summer. Toms Coney Island's general manager Vasilios Tourlokas says the mild summer impacted his boardwalk business in the best way possible: a 10 to 15 percent increase.
    From the brand-new Thunderbolt roller coaster to the world-famous boardwalk, tourists and business owners alike say Coney Island had a great ride of its own this summer. Toms Coney Island's general manager Vasilios Tourlokas says the mild summer impacted his boardwalk business in the best way possible: a 10 to 15 percent increase.
Powered by WorldNow
Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | New Terms of Service What's new | Ad Choices