Consumers Earned and Spent More in October 

Consumers’ incomes and expenditures increased by about the same rate in October. 

The Bureau of Economic Analysis (BEA) reported Thursday (Dec. 1) that personal income increased by 0.7%, disposable personal income (DPI) rose 0.7% and personal consumption expenditures (PCE) were up 0.8% during the month. 

The growth rates for both personal income and disposable personal income were the highest recorded in the last five months, while that of personal consumption expenditures was topped only by the 1.2% growth rate recorded in June. 

The increase in personal income was driven by both compensation and government social benefits, with private wages and salaries leading the gains in compensation and one-time refundable tax credits accounting for much of the rise in social benefits, according to the report. 

Spending for both goods and services contributed to the increase in personal consumption expenditures, with new motor vehicles, gasoline and other energy goods being the leaders in the goods category, while food services and accommodations were the largest contributors to the services increase. 

Financial services and insurance — and financial service charges, fees, and commissions in particular — were highlighted in the report as a category of expenditures that decreased in October. 

The PCE price index for October increased 0.3%, with the BEA reporting higher prices for gasoline, other energy goods, food services and accommodations, housing services and food, and lower prices for durable goods. 

Excluding food and energy, the PCE price index increased 0.2%. 

The month’s increase in PCE was equal to that recorded in the previous two months, higher than the 0.1% drop seen in July and lower than the 1.0% rise noted in June. 

Interviewed by Reuters, Christopher Rupkey, chief economist at FWDBONDS, said: “The consumer is alive and well. Right now, even if consumers do not buy anything more in November and December, real consumer spending is running well above normal and in no way, shape or form looks like a recession.”