WASHINGTON, Dec 21 (Reuters) - Americans curbed their spending in November as their incomes shrank for the third month in a row, the government said on Friday.
But spending, which took a nosedive in the immediate aftermath of the Sept. 11 attacks, has held up better than most economists expected.
The Commerce Department said consumer spending fell 0.7 percent last month -- a milder drop than the 1 percent expected by U.S. economists in a Reuters survey.
"It's kind of encouraging," said Gary Thayer, chief economist at A.G. Edwards and Sons in St. Louis.
"Right at the end of September, we saw a drop in confidence and thought consumers were really going to pull back. But confidence has recovered and consumer spending is holding up better than expected," Thayer added.
The government's spending numbers were released at the same time as a report from the University of Michigan that showed consumers have remained unexpectedly upbeat during the crucial holiday retail season.
The university's closely watched consumer sentiment index rose to 88.8 in December from 83.9 in November, marking the third straight monthly rise.
Spending has followed an uneven pattern since the Sept. 11 attacks on the World Trade Center and the Pentagon. It plunged 1.7 percent in September as shell-shocked consumers avoided shopping and stayed glued to their television sets. But it bounced back in October, surging 2.9 percent as automakers lured hordes of consumers into car showrooms by offering financing bargains.
It was in part because of that jump in spending in October that economists had expected the November spending number to decline sharply.
Personal income, including wages, salaries and income from such sources as rent, fell 0.1 percent in November. It was the third month in a row it has declined by that amount.
