Business

Consumers come to the rescue

US consumer spending rose solidly in September, putting the economy on a firmer footing heading into the fourth quarter even though households had to pull back on saving to fund purchases.

The Commerce Department said yesterday that consumer spending rose 0.8 percent, the largest increase since February, after an unrevised 0.5 percent gain in August.

Spending accounts for about 70 percent of US economic activity, and the September increase offered a strong and encouraging handoff from the July-September period to the current quarter.

“The jumping-off point, or the base point, is already pretty high. You have a lot of momentum going into the fourth quarter,” said Ellen Zentner, a senior US economist at Nomura Securities in New York.

The rise exceeded economists’ expectations for a 0.6 percent increase last month.

When adjusted for inflation, consumer spending rose 0.4 percent, after edging up 0.1 percent in August.

Consumer spending increased at a 2 percent annual pace during the quarter after rising at a 1.5 percent rate in the prior period.

That in turn helped to lift economic growth at a 2 percent pace, an acceleration from the second quarter’s 1.3 percent advance.

The spurt in spending as the quarter ended, which was concentrated in long-lasting goods such as autos and Apple’s iPhone 5, provides momentum that should help support growth in the fourth quarter.

Some analysts, however, warned that spending could weaken near year-end if consumers start to worry about the potential for higher taxes at the start of the year.