Economy

Consumer Spending in US Posts Biggest Gain in Eight Years

Consumer Spending in US Posts Biggest Gain in Eight Years”

While the Commerce Department released a report on Monday showing US personal income rose in line with economists in the month of September, the report also showed a bigger than expected jump in personal spending.

Washington, DC, October 30, 2017-Personal income increased $66.9 billion (0.4%) in September, according to estimates released by the Bureau of Economic Analysis.

Monday's report also showed the Federal Reserve's preferred measure of inflation, the price index for personal consumption expenditures, increased 0.4% in September from the prior month.

Spending by USA consumers increased in August by 0.1%, which was left unrevised by the federal agency. The overall economy, as measured by the gross domestic product, grew at a solid 3 percent annual rate in the July-September quarter, despite the devastation from two hurricanes. Spending on nondurable goods such as clothing and services such as utility payments was also strong.

Consumer confidence has been bolstered by a Wall Street rally, which has pushed stocks to new highs. Excluding the often-volatile categories of food and energy, so-called core prices were up only 0.1% in September.

Fed officials, who have raised interest rates twice this year, will meet again on Tuesday and Wednesday.

Core personal consumption expenditures rose in line with expectations, at 0.1% last month.

At least some of the increase could be due to U.S. consumers replacing cars damaged in hurricanes Irma and Harvey.

The core PCE was up 1.3% for the 12-month period through the ended of September, after a gain that was similar during August.

The 1 percent jump in consumer spending reflected a 3.2 percent advance in spending on durable goods such as autos.

The personal-saving rate was 3.1% in September, down from 3.6% the prior month and the lowest rate since December 2007.

The Fed targets a 2% annual inflation rate.



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