With conflicting signs of whether spending during the upcoming holiday season will expand or contract, a new report from the Commerce Department seems to point to the latter.
Consumer spending for the month of September declined by 0.5 percent, marking the largest drop in monthly spending seen by the Commerce Department since December 2008. The decline also comes after a far more positive showing in August, which was an upwardly-revised increase in spending of 1.4 percent.
Still, the decline in September was anticipated by many experts who did not expect Augusts’ rise in spending to last following the end of the boost provided by the Cash for Clunkers program.
"The consumer went out spending in August, but once that incentive was taken away they didn’t have the same reason to spend as much," Jonathan Basile, an economist at Credit Suisse, told Bloomberg. "Consumers are going to be selective and not necessarily aggressive going into the holiday season."
The decline in spending could also show that consumers who are dealing with debt or credit card counseling may be beginning to limit their spending as the holidays approach. A recent study by Consumer Reports found that 65 percent of consumers expected to cut back on their holiday purchases this season.