WASHINGTON - Consumers battered by a slumping housing market and a credit crunch slowed the nation's growth in spending to the smallest amount in four months. In another sign of weakness, construction activity fell by a larger-than-expected amount.
The Commerce Department reported Friday that consumer spending edged up 0.2 percent in October, the weakest showing since June. Individual incomes grew by just 0.2 percent for the month, the poorest showing in six months.
Meanwhile, a separate Commerce report showed that construction spending fell by 0.8 percent in October, the biggest decline since July. Activity in the besieged housing industry fell for a 20th consecutive month, while nonresidential construction also weakened.
The weakness in consumer spending, incomes and construction raised new worries about spreading economic weakness caused by the steepest slump in housing in more than 20 years and a widening credit crisis triggered by rising mortgage defaults. Consumers are also being battered by surging prices for gasoline and other energy products.
"Consumers are still spending, though not nearly at the pace they had been," said Joel Naroff, chief economist at Naroff Economic Advisors.