Solid growth for U.S. consumer spending
WASHINGTON — Consumers boosted their spending a solid 0.3 percent in October, while their incomes grew 0.4 percent. Both were healthy gains indicating the all-important holiday shopping season was getting off to a good start.
The October increase in consumer spending followed a much larger 0.9 percent rise in September, the Labor Department reported Thursday. The September climb had been the biggest in eight years. The rise in incomes last month matched the September result, with both months showing the best performance since February.
The October gain in spending after the surge in September was viewed as evidence of good momentum behind consumer spending, which accounts for 70 percent of economic activity, at the start of the fourth quarter.
“The economy is at full employment, and more workers means more paychecks to be spent,” said Chris Rupkey, chief financial economist at MUFG Union Bank in New York.
A key measure of inflation rose 1.6 percent over the last 12 months. That is still below the Federal Reserve’s target for inflation of annual price increases of 2 percent and represented a slip from a 12-month gain of 1.7 percent in September. Inflation has been below the Fed’s 2 percent target for more than five years.
The 0.3 percent rise in consumer spending came despite the fact that spending on durable goods such as autos actually fell 0.1 percent last month. That decline was offset by a 0.2 percent increase in spending on nondurable goods — items such as clothing and food not expected to last three years — and a 0.3 percent increase in spending on services, a category that covers such things as doctor’s visits and utility bills.
The personal saving rate rose to 3.2 percent of aftertax income in October, up from September’s 3 percent.