U.S. consumer spending
increases solidly, inflation rising
Send a link to a friend
[October 31, 2016]
WASHINGTON,
(Reuters) - U.S. consumer spending rose more than expected in September
as households boosted purchases of motor vehicles and inflation
increased steadily, which could bolster expectations of an interest rate
hike from the Federal Reserve in December.
The Commerce Department said on Monday that consumer spending, which
accounts for about 70 percent of U.S. economic activity, increased 0.5
percent after a downwardly revised 0.1 percent drop in August.
Last month's increase in consumer spending offered a fairly strong
handoff from the July-September period to the current quarter.
The report was published ahead of the beginning of the Fed's two-day
policy meeting on Tuesday. The U.S. central bank is not expected to
raise rates at that meeting but is expected to increase borrowing costs
in December.
Economists polled by Reuters had forecast consumer spending rising 0.4
percent last month. Spending in August was previously reported to have
been unchanged.
When adjusted for inflation, consumer spending rose 0.3 percent after
falling 0.2 percent in August.
![](http://archives.lincolndailynews.com/2016/Oct/31/images/ads/current/goodman_sda_Book_021914.png)
The spending figures were incorporated into last Friday's report on
third-quarter gross domestic product. Consumer spending increased at a
2.1 percent annual pace after advancing at a robust 4.3 percent rate in
the prior period.
Despite cooling off, consumer spending combined with a spurt in soybean
exports and a turnaround in inventory investment to boost economic
growth to a 2.9 percent pace in the third quarter. The economy grew at a
1.4 percent rate in the April-June quarter.
With consumer spending firming, inflation continued to gain steadily.
The personal consumption expenditures (PCE) price index increased 0.2
percent after a similar gain in August. In the 12 months through
September the PCE price index rose 1.2 percent, the biggest gain since
November 2014.
[to top of second column] |
![](../images/103116pics/busine56.jpg)
A shopper talks on her mobile phone in Beverly Hills, U.S., May 17,
2016. REUTERS/Mario Anzuoni
![](../images/ads/current/demay_inv-lda081412.png)
Excluding food and energy, the so-called core PCE price index rose 0.1
percent after rising 0.2 percent in August. In the 12 months through
September the core PCE increased 1.7 percent after a similar increase in
August.
The core PCE is the Fed's preferred inflation measure and is running
below its 2 percent target.
Consumer spending last month was lifted by a 1.3 percent surge in
purchases of long-lasting manufactured goods such as automobiles.
Spending on services rose 0.3 percent.
Personal income increased 0.3 percent in September after rising 0.2
percent in August. Wages and salaries advanced 0.3 percent after edging
up 0.1 percent the prior month. Savings fell to $797.8 billion from
$820.5 billion in August.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
![](http://archives.lincolndailynews.com/2016/Oct/31/images/ads/current/graue_16_encore_101016.png) |