Sandy impact on US consumer spending seen temporary

Though superstorm Sandy took some wind out of consumers' sails after it hit the US east coast in October, the impact is expected to be temporary.

According to the commerce department, personal income was flat in October as against the previous month and nominal spending was down 0.2 per cent. Though Sandy had left significant impact, the department could not put a figure to the total impact, the report noted.

The largest adjustment was an $18 billion drop in wages and salaries due to work interruptions.

After accounting for price changes, real consumer spending started this quarter slightly down from its average in the third quarter, even as real spending rose at an annual rate of only 1.4 per cent.

Economists though do not expect consumer spending to stay in the red through the quarter though replacement of items lost in the storm would drive a lot of spending.

Further, shoppers should return to the stores during the holiday season, although solid gains seen in early shopping would not signal strong spending for the rest of the year.