US consumer spending picks up in October

November 26, 2014 – US consumer spending rose slightly in October after stalling in September, while personal income growth remained marginal, the Commerce Department reported today.

Consumer spending, driving about two-thirds of US economic output, rose 0.2 per cent, matching analysts’ consensus estimate. In September, spending was flat, the department said, revising up its prior reading of a 0.2 per cent decline.

Personal income increased 0.2 per cent for the second consecutive month in October, the weakest rise since December 2013. Growth in personal income was only half what analysts expected. Wages and salaries, which account for the largest share of personal income, rose 0.3 per cent in October after a 0.2 per cent increase in September.

Inflation remained subdued and well below the Federal Reserve’s comfort zone of 2.0 per cent. The personal consumption expenditures (PCE) price index, the Fed’s preferred inflation measure, rose at an annual rate of 1.4 per cent in October, the same increase as in the prior month.

Excluding volatile food and energy prices, core PCE prices inched up to a 1.6 per cent annual rate, after holding at a 1.5 per cent pace for the prior five months. Month-over-month, PCE prices rose 0.1 per cent for the second straight month in October, while core PCE prices climbed 0.2 per cent, double the September rise.