Consumer Spending Up a Skimpy 0.2% : Economy: Americans’ income grew a lackluster 0.3% last month. Report blames effect of Hurricane Hugo.

WASHINGTON — Consumer spending in September posted its weakest advance in a year, while Americans’ personal income grew a lackluster 0.3%, the government said today in a report raising new concern about the health of the economy.

The Commerce Department said consumer spending rose 0.2% last month. It was the most sluggish figure since September, 1988, when it fell 0.1%, and followed more robust increases of 0.9% in August and 0.8% in July.

The income growth of 0.3% followed an identical advance in August and a 0.6% gain in July.

The statistics on Americans’ income growth and spending habits provided fresh evidence that the economy is continuing to slow. As measured by the gross national product, the economy grew at a moderate 2.5% in the July-September quarter, but few economists expect it to match that pace in the last three months of the year, with a handful saying the nation could slip into a recession.

However, the government noted that Hurricane Hugo, which struck North and South Carolina in September, reduced personal income, with most of the decline coming in rental income. Without the storm, incomes would have risen twice as much, 0.6%.

Overall, personal income in September totaled $4.47 trillion after a revised rate of $4.46 trillion a month earlier.

Spending came in at an annual rate of $3.53 trillion after a revised $3.52 trillion in August.

The September report showed that Americans’ income after taxes rose only 0.2%, down from the 0.3% gain in August.

With income growing at the same rate as after-tax income, Americans’ savings rate held steady at 4.9%, the same as in August but significantly less than the 5.6% rate in July.

The key component of the income category, wages and salaries, increased $14.4 billion, compared with a rise of $5.7 billion in August. Hurricane Hugo reduced wages and salaries by about $2 billion.

The storm reduced rental income by $9 billion because uninsured losses are deducted as an expense when figuring rental income.