Washington, DC - Consumers boosted their spending in October at the fastest pace in seven months, while their incomes rose by the largest amount in nine months — both good signs for future economic growth.
Consumer spending rose a sharp 0.6 percent last month, the Commerce Department reported Thursday. It was the biggest increase since a similar gain in March and was three times faster than the 0.2 percent September performance. Incomes, which provide the fuel for spending, were up 0.5 percent in October, a significant pickup from a 0.2 percent September gain.
A key gauge of inflation tied to consumer spending posted a 2 percent rise in October compared to a year ago, hitting the annual target for inflation set by the Federal Reserve.
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Both the climbs in spending and income were stronger than economists had been forecasting.
Consumer spending is closely watched because it accounts for 70 percent of economic activity.
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The rise in spending reflected strong gains in purchases of durable goods, items such as autos expected to last at least three years, and non-durable goods and services such as utility payments.
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The advance in personal incomes included a 0.3 percent rise in wages and salaries.
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