Consumer spending turned higher in September and incomes grew briskly, suggesting the economy is holding up well to the double blows of hurricanes Katrina and Rita.

The 0.5 percent rise in consumer spending came after spending fell by that amount in August, reflecting the hit from Katrina, the Commerce Department reported Monday.

Americans' incomes increased by 1.7 percent in September, the largest gain since December 2004, boosted in part by post-hurricane insurance payments. The growth in income marked an improvement from the 0.9 percent plunge posted in August - a decline that largely reflected fallout from Katrina.

Even though the economy is weathering the storms, they certainly packed a punch. Uninsured losses to residential and business property reduced incomes by about $5 billion on an annualized basis in September and by about $240 billion, annualized, in August, the government estimated.

On Wall Street, the report helped to boost stocks. The Dow Jones industrials were up 70 points, and the Nasdaq gained 26 points in morning trading.

In September, consumers trimmed spending on big-ticket durable goods, such as cars. But they boosted spending on nondurables, such as food, clothes and gasoline, as well as on services, a broad category that includes some energy-related items.

When consumer spending is adjusted for inflation, however, the spending picture looks softer. Overall spending dipped 0.4 percent in September after a 1 percent drop in August.

Economists, however, expect consumer spending probably will moderate in the final three months of this year as auto sales drop off with the waning of generous incentives and energy prices cause belt-tightening.

Chan and other analysts are hoping any moderation in consumer spending will be more than offset by stronger spending elsewhere, which should allow the economy to grow at a decent pace in the current October-to-December period.

Monday's report also showed that Americans' personal savings rate - savings as percentage of after-tax income - stayed in negative territory in September at minus 0.4 percent.

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