WASHINGTON — At the start of the critical holiday shopping season, the economy received a dose of mixed news Wednesday.
Consumers barely increased their spending in October, and businesses pulled back on investment in long-lasting manufactured goods. Still, Americans’ pay rose by the most in seven months, a sign they may spend more in coming weeks.
Some economists were discouraged by the reports, especially after a separate report earlier this month showed Americans spent more on retail goods in October for the fifth straight month.
Paul Dales, a senior U.S. economist with Capital Economics, said the slower consumer-spending growth and decline in business investment suggest economic growth in the October-December quarter could be weaker than first thought. He now expects 2.5 percent growth instead of 3 percent.
Consumer spending increased 0.1 percent last month, the Commerce Department said. It was the poorest gain in four months.
Yet people continued to spend more on cars and electronics, analysts noted. Spending on longer-lasting goods rose 0.8 percent. Part of that reflected the introduction of the Apple iPhone 4S last month.
People cut back on nondurable purchases, such as clothing and food. And spending on services, which represents two-thirds of consumer spending, barely grew. That led many analysts to speculate that consumers might be giving up vacations and eating out less because of the weak economy.
