One day after reports that consumers powered the economy to a late-summer surge came a note of caution that they could run low on spending power.

The 1 percent drop in disposable income reported for September and the 0.3 percent dip in spending could be the signs that the recovery can no longer depend on consumers.

The tide of tax rebates and refinancing for low-rate mortgages helped pace the economy to third-quarter growth of 7.2 percent, the government said Thursday. But the tide has turned and apparently eroded consumer spending, which accounts for two-thirds of the economy.

"The September numbers are really troubling," said economist and forecaster Michael Donihue of Colby College in Maine.

Economic growth --- as measured by gross domestic product --- last quarter reached its fastest pace in 19 years. That news fed hopes that the torpid recovery had finally been sparked into high gear.

The broader numbers Friday seemed encouraging: American incomes in September were 3.2 percent higher than a year earlier, and they grew 0.3 percent during the month.

Buoyed by a rising stock market and generally good economic news, consumer confidence in October ticked up from September, according to the University of Michigan survey released Friday.

But long-term, consumer confidence depends on a robust job market --- and the apparently stunning expansion of the third quarter has not yet translated to job growth, Donihue said.

"It will be very interesting to know what happened in October to jobs --- whether there was a lagged hiring from the third quarter."

Friday's report was the first cautionary sign that spending decelerated just as it did after the tax rebate checks of 2001 had been cashed. That parallel is worrisome: The economy then managed a burst of speed, only to drift back toward neutral as job losses continued.

To break the cycle, companies must hire. And while many see improved sales, companies hold back on hiring because they are awash in uncertainty, said economist Campbell Harvey of Duke University's Fuqua School of Business.

Yet after seeing previous false starts, their hope is outweighed by international tensions, the approaching U.S. elections, and the large trade and budget deficits, he said.

"They fear the downside more than they perceive gain from the upside," said Harvey. "What could change that is a sustained period of stability. And that is what we want --- sustainability."

Growth in the current quarter will be less than half the last quarter's 7.2 percent pace, Harvey said. "It is just not going to make much of a dent in the job situation."

Optimists hope that the rush of spending last quarter has sparked continued growth that will mean substantial hiring during the next few months, but it's not visible yet.

September saw job growth of 57,000, breaking a seven-month skein of losses, and Goldman Sachs economist Andrew Tilton on Friday predicted the economy will add just 75,000 jobs in October. That is still only about half what is needed to cut the unemployment rate, economists say.

But it may be that September was just a lull between the late-summer spending and the holiday retail binge. Companies reported extremely low inventories --- which could mean lots of hiring as they meet orders over the next few months.

And some say hiring has begun.

For instance, the interest in hiring out-of-work professionals is picking up, said Sarah Douthitt of Right Management Consultants in Atlanta, a placement and counseling company.

"The amount of job leads I am getting from recruiters who are in urgent mode --- this is a lot more volume than I'm used to," Douthitt said. "I have been in this job since the economy tanked in 2001. I have never seen it like this."

THE SCORECARD
A look at our nation's personal spending.
Chart tracks spending from January 2003 ($7.49 trillion) through September 2003 ($7.78 trillion).
Source: Department of Commerce
/ JEROME THOMPSON / Staff