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Superstorm Sandy hits US consumer spending

Agence France-Presse
The largest of the adjustments it made was for work interruptions, which reduced wages and salaries by about $18 billion at an annual rate

THOUSANDS HOMELESS. Cars piled on top of each other at the entrance to a garage on South Willliam Street in Lower Manhattan October 31, 2012 in New York as the city begins to clean up after Hurricane Sandy. AFP PHOTO/Stan HONDA

WASHINGTON, U.S. – Consumer spending, the key driver of the US economy, fell in October under the impact of Superstorm Sandy, while incomes were flat, government data released Friday showed.

After four straight months of gains, personal consumption expenditures (PCE) fell 0.2 percent, the Commerce Department said; analysts had expected an 0.1 percent rise in spending.

Personal incomes were unchanged from September after rising for five months; the consensus estimate was a 0.2 percent increase.

The data reflected the effects of Hurricane Sandy, which made landfall in the United States on October 29, with especially severe damage in New York and New Jersey.

The largest of the adjustments it made was for work interruptions, which reduced wages and salaries by about $18 billion at an annual rate, the department said.

Inflation remained muted. The price index for PCE rose 0.1 percent in October, after a 0.3 percent increase in September.

Excluding food and energy, the core PCE prices rose 0.1 percent, the same gain in the prior month.

The report was “a disappointing start to the fourth quarter,” said Robert Kavcic at BMO Capital Markets.

“This follows yesterday’s downward revision to Q3 real consumer spending, which is suddenly looking sluggish,” he said. – Agence France Presse