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Personal income, spending up in Sept. GDP rose by record in third quarter

Americans’ incomes increased in September by more than expected, boosted by employment gains and helping to propel consumer spending at the end of the third quarter.

Personal incomes rose 0.9% from the prior month following a 2.5% decline in August, a Commerce Department report showed Friday. That compared with estimates for a 0.4% gain. Household outlays advanced 1.4%, also exceeding forecasts.

The personal saving rate fell for a fifth month but remained elevated at 14.3%. In February, when the unemployment rate was at a 50-year low, the savings rate was 8.3%.

Hundreds of thousands more Americans headed back to work in September as the labor market continued to recover. Though the extended stalemate between lawmakers on additional stimulus relief could restrain growth in incomes, further job gains and an elevated savings rate will continue to support consumer spending.

The supplemental jobless payments President Donald Trump authorized in early August also lent an extra boost to incomes, the report showed. “Other” transfer receipts totaled an annualized $963.9 billion during the month, up from about $716 billion.

Gross domestic product rose by a record in the third quarter, and the better-than-expected September spending figures suggest the economy headed into the final three months of the year with solid positive momentum.

The income and spending report showed wages and salaries rose 0.8% in September. Unemployment insurance payments made up 1.8% of annualized income in September.

Adjusted for inflation, consumer spending increased 1.2% in September after rising 0.7% in August. Real outlays for durable goods, such as motor vehicles, rose 2.9% in September from a month earlier, while services spending climbed 0.8%.

The broader personal consumption expenditures price gauge, which the Federal Reserve officially targets, rose 0.2% from the prior month and was up 1.4% from a year earlier.

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