US Consumer Spending Rebounds

U.S. consumer spending rebounded in October, suggesting some resilience in the economy at the start of the fourth quarter. The Commerce Department said on Wednesday consumer spending increased 0.2 percent last month after being flat in September.

Consumer spending, which makes up more than two-thirds of U.S. economic activity, was previously reported to have declined 0.2 percent in September.

Economists polled by Reuters had forecast consumer spending rising 0.3 percent last month. When adjusted for inflation, consumer spending also rose 0.2 percent after being flat in September.

 
Extremely low gasoline prices as well as a strengthening labor market are supporting consumer spending, which should help to shield the economy from slowing growth in China and the euro zone, as well as a recession in Japan.

The government reported on Tuesday that the economy grew at a 3.9 percent annual pace in the third quarter. Income rose a modest 0.2 percent in October after a similar gain in the prior month. With income growth matching consumer spending, the saving rate was unchanged at 5.0 percent.

The moderate pace of consumer spending, combined with weak gasoline prices, kept inflation under wraps. A price index for consumer spending edged up 0.1 percent after a similar gain in September.

In the 12 months through October, the personal consumption expenditures (PCE) price index rose 1.4 percent after advancing by the same margin in September.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza