U.S. Consumer Spending Meets Expectations
WASHINGTON – U.S. consumer spending rose 0.2 percent in October, as expected, driving the personal saving rate into negative territory for the fifth straight month, a government report showed on Thursday.
Personal income also rose in October, by 0.4 percent, slightly less than the 0.5 percent increase forecast by Wall Street, the Commerce Department said. That followed an outsized 1.7 percent rise in income in September, which was driven by insurance payments in the wake of hurricanes Katrina and Rita.
The department's inflation measure, closely watched by policy-makers at the Federal Reserve, rose just 0.1 percent after an energy-led 0.9 percent spike in September.
Prices also rose 0.1 percent when volatile food and energy were excluded, less than the 0.2 percent increase expected by Wall Street. The small rise took the year-over-year measure of the so-called core PCE price index to just 1.8 percent, the smallest increase since February 2004, from 2.0 percent in September, a Commerce aide said.
The saving rate, the percentage Americans sock away after spending, taxes and interest payments, was minus 0.7, the fifth straight negative reading. The saving rate has not been positive since March.
The Commerce Department said the impact of hurricanes Katrina, Rita and Wilma on income was almost a wash, rental and proprietors' income were reduced about $10 billion, while insurance benefit payments boosted incomes about $13 billion.