Americans’ purchasing power deteriorated, with disposable income adjusted for inflation rising at a 2.9 percent annualized rate from July through September after a 4.1 percent increase in the second quarter.
Wage Gains
Today’s report also included revisions to second-quarter personal income. Wages and salaries increased by $77.2 billion, up from the previously reported gain of $54.6 billion. They rose about $46 billion in the third quarter.
The data also offered a first glance at corporate profits. Before-tax earnings rose at a 1.8 percent rate after climbing at a 3.3 percent pace in the prior period. They increased 5.6 percent from the same time last year.
Gross domestic income, which reflects all the money earned by consumers, businesses and government agencies, increased at a 1.4 percent annualized rate in the third quarter after a 3.2 percent gain in the previous three months.
Companies and consumers were more frugal in the third quarter. Consumer spending, which is almost 70 percent of the economy, increased 1.4 percent, the smallest gain since the fourth quarter of 2009. Purchases added 0.96 percentage point to growth last quarter.
Business Spending
Corporate spending on equipment was stagnant in the third quarter, compared with a 3.7 percent decline previously reported. Such outlays may be slow to improve.
Demand for non-defense capital goods excluding aircraft, a proxy for future business investment in computers, electronics and other equipment, declined 1.2 percent in October after falling 1.4 percent the prior month. It was the first back-to-back decrease in a year, Commerce Department data showed Nov. 27.
Still, housing and autos remain bright spots for the economy. Residential construction increased at a 13 percent annualized rate, compared with a previous estimate of 14.6 percent, and added 0.38 percentage point to growth, today’s figures showed.