WASHINGTON - A mixed picture of the economy emerged the day before key midterm elections that have focused on the nation's financial health.
Spending by Americans slowed in September, and their incomes fell for the first time in more than a year. At the same time, manufacturing activity grew by the most in five months and the weak construction industry showed a little life.
The new data reported by the government and a private trade group Monday suggest the economy is growing, albeit at an anemic pace. Some analysts worry that conditions could worsen after the election when government programs that have been propping up the economy end.
“With the job market as tough as it is and with government help beginning to fade, income gains are going to be very hard to come by,” said Mark Zandi, chief economist at Moody’s Analytics.
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Consumer spending is growing, but at a much slower rate than during the summer. It rose 0.2 percent in September after 0.5 percent gains in July and August, the Commerce Department said.
A major reason spending is slowing is that incomes fell for the first time since July 2009, just after the recession officially ended. The 0.1 percent decline in September followed a 0.4 percent rise in August that had been pushed higher by the return of extended unemployment benefits.
A separate report showed manufacturing activity expanded last month at the fastest pace since May – the 15th straight month for growth. The Institute for Supply Management said its manufacturing index read 56.9 in October, up from 54.4 in September.
A reading above 50 indicates growth.
And the struggling construction industry posted small gains in September, buoyed by increases in government projects and residential spending. The Commerce Department said spending on building projects rose 0.5 percent after having falling in August to the lowest point since July 2000.
Even with the small September gain, construction activity remains 34 percent below the peak hit in 2006 when builders were enjoying a boom in residential housing.
“It is encouraging that economic growth no longer appears to be slowing. Nonetheless, the economy is not growing fast enough to reduce the unemployment rate or boost inflation,” said Paul Dales, U.S. economist with Capital Economics.