Data Back Economic Optimism

The economy is gaining momentum, bolstered by home building, shipping and even the country’s beleaguered manufacturing sector, the Federal Reserve said Wednesday in a newly upbeat assessment.

Evidence of a strengthening economy showed up in other reports as well.

The Commerce Department said consumer spending shot up 0.7% in October, the best showing since July, as Americans’ incomes, the fuel for future spending, rose 0.6%.

The Institute for Supply Management reported that its main index for measuring industrial activity performed better than expected, rising to 57.8 in November from 56.8 in October.

The Federal Reserve said that reports from its 12 regions “generally paint a picture of continued economic growth” from mid-October through mid-November with improvements noted in a number of areas.

The Fed’s latest “beige book,” named for the color of its cover, will be used when policymakers meet for their last discussion of the year Dec. 14. It is widely expected that the Fed will raise interest rates for a fifth straight time this year in an effort to make sure that the rebounding economy does not trigger unwanted inflation.

The rebound in manufacturing was helping job markets, and some areas of the country were experiencing labor shortages.

As for consumer spending, analysts said the 0.7% jump showed that consumers, who account for two-thirds of total economic activity, were getting a second wind.

“Consumers were not deterred by higher oil prices and by consumer confidence numbers that keep on going lower,” said Ken Mayland, president of ClearView Economics.

The overall economy grew at a solid 3.9% rate in the July-September period, and based on Wednesday’s reports many analysts said that growth this quarter could be even better.

Wednesday’s spending report showed that consumer spending on big-ticket durable goods such as cars rose 0.2% in October after a 1.2% gain in September.