Personal incomes, consumer spending lower than expected

fistful of dollars - personal income, consumer spending, down
fistful of dollars - personal income, consumer spending, down

September 2010 was unexpectedly less robust for U.S. consumers, as personal incomes fell, surprising economists, $16.8 billion, or -0.1%. Disposable income decreased even more; $20.3 billion, or -0.2%. At the same time, and despite this fall in income, personal consumption expenditures (a.k.a. consumer spending) increased only $17.2 billion, or 0.2% -- far lower than economists expected. A Bloomberg survey of 67 economists yielded an average expectation of a spending increase of double that -- 0.4%.

The wonky thing this means is that inflation is not rising as much as the Fed and economists want it to, increasing the likelihood that the Federal Reserve will pump more money into the economy -- by lowering short-term interest rates for banks yet again -- when they meet later this week. The practical meaning is that the economy is doing more poorly than everyone thinks, especially for the consumer. As our national debate peaks Tuesday, Nov. 2, Election Day, with a firestorm of a campaign season that's largely been about the economy, and how the gap between the richest 2% and the faltering middle class is growing ever larger, it's proof that things are even worse than we're saying.