Consumer spending bounces back in October; income growth holds steady
Consumer spending bounced back last month after a sluggish September and income growth held steady, positive signs heading into the holiday shopping season.
Personal consumption expenditures rose 0.2% in October after barely budging the previous month, the Commerce Department said Wednesday.
Spending rose less than 0.1% in September, a figure that was revised up from the previous estimate of a 0.2% decline.
Incomes grew 0.2% last month, the same as in September, the Commerce Department said, but the growth was slower than in previous months.
Economists had forecast spending would rise 0.3% last month and incomes would jump 0.4%.
Consumer spending, including mortgage payments, accounts for about two-thirds of U.S. economic activity.
Income is a key to that spending, and income growth has been slow in the recovery from the Great Recession.
Fortunately for consumers, inflation remained low in October.
The personal consumption expenditure price index rose 0.1% last month, the same pace as in September.
For the 12 months ended Oct. 31, prices rose 1.4%, well below the Federal Reserve’s 2% annual target.
The yearly inflation rate was the same as for the 12 months ended Sept. 30.
Excluding volatile food and energy costs, prices were up 0.2% in October after a 0.1% rise the previous month.
The annual rate for that so-called core inflation was 1.6% through October, up from 1.5% through September.
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