WASHINGTON — Personal income unexpectedly fell in September, dropping 0.1% from the prior month, the Commerce Department reported Monday.
Consumers tapped their savings to bridge the gap between income and spending, which rose 0.2%. Economists expected consumption to increase 0.4% and personal income to rise 0.2%.
Core spending, which excludes food and energy costs, rose 1.2% during the 12-month period ending in September, the smallest gain in nine years.
“Consumer balance sheets remain frail and slow to heal, one of the many reasons the Fed will use to justify its attempts to stimulate the economy further,” Diane Swonk, chief economist at Mesirow Financial, said in a research note. “Much of the 'drop’ in income can be attributed to distortions to income growth created by extensions to unemployment insurance, which added more than $20 billion to income [in August].”