Personal income, spending increase

U.S. incomes grew steadily in October and spending rebounded, the government said Thursday, but a Midwest business barometer showing a November slump raised doubts about the economy’s direction.

The Commerce Department said personal income rose 0.4% after a 0.5% September rise; spending was up 0.2% after contracting 0.2% a month earlier.

The income and spending report was one in a series including higher new claims for jobless benefits last week and a drop in the National Assn. of Purchasing Management-Chicago business barometer index to 49.9 from 53.5 in October.

It was the first time in 3 1/2 years that the index slipped below 50, a level that marks the break-even point between expansion and contraction in business activity.

Orders and hiring both weakened last month.

The Commerce Department report showed that so-called core consumer prices -- which exclude food and energy items -- rose 0.2% in both September and October.

On a year-over-year basis, core prices were 2.4% higher in each month.

That means core inflation is above a presumed Fed “comfort zone” of around 2% and underlines Fed Chairman Ben S. Bernanke’s remark in New York on Tuesday that the core rate was “uncomfortably high” in the view of policymakers. The Fed closely monitors core prices.

The broader personal consumption expenditures index, including food and energy, was up 1.5% on a year-over-year basis in October, its smallest rise since a 1.4% gain in August 2002.

The Labor Department said new claims for unemployment benefits unexpectedly jumped 34,000 to a seasonally adjusted 357,000 last week.