In October, consumer income and spending climbed at roughly the same rate.
Personal income climbed by 0.7%, disposable personal income (DPI) increased by 0.7%, and personal consumption expenditures (PCE) increased by 0.8% during the month, according to the Bureau of Economic Analysis (BEA) on Thursday (Dec. 1).
Personal income and disposable personal income growth rates were the greatest in the past five months, while the personal consumption expenditures growth rate was only exceeded by the 1.2% rate recorded in June.
According to the research, the growth in personal income was driven by both compensation and government social benefits, with private earnings and salaries leading compensation gains and one-time refundable tax credits accounting for the majority of the increase in social benefits.
Spending on both goods and services contributed to the increase in personal consumption expenditures, with new motor cars, gasoline, and other energy items leading the goods category and food services and lodging leading the services increase.
Financial services and insurance, in particular financial service charges, fees, and commissions, were singled out in the report as a category of expenditures that fell in October.
The PCE price index climbed 0.3% in October, with higher prices for gasoline, other energy items, food services, accommodations, housing services, and food, and lower prices for durable goods reported by the BEA.
The PCE price index grew 0.2% excluding food and energy.
The month’s gain in PCE was the same as the previous two months, greater than the 0.1% dip in July but lower than the 1.0% rise in June.
“The consumer is alive and well,” said Christopher Rupkey, chief economist of FWDBONDS, in an interview with Reuters. Even if consumers do not buy anything extra in November and December, actual consumer expenditure is now considerably above usual and does not suggest a recession.”