US consumer spending and personal income both misses estimates in the October readings gave readings, disappointing markets and denting risk appetite. This sent the US dollar higher on safe haven demand while euro and sterling dipped after the data.
American consumers reduced their spending as personal income growth stalls. According to data from the US Department of Commerce, consumer spending fell 0.2 percent after a 0.8 percent rise in September, having been expected to hold steady. This was the biggest drop in spending since May.
Personal income was flat in October, according to the data, lower than the expected 0.2 percent increase and the weakest income reading since April.
Meanwhile, in real terms, when adjusted for inflation, consumer spending fell 0.3 percent, the first decline since June, after rising 0.4 percent the prior month and the largest one-month dip since September 2009.
The data is worrying because consumer spending accounts for 70 percent of economic activity in the US economy and suggests that economic growth will be slower in the fourth quarter.