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U.S. Consumer Spending Increases 0.6% in October; Home Sales Drop
The Commerce Department reported consumer spending increased $86.9 billion or 0.6% last month, its fastest pace in seven months. Meanwhile, personal incomes rose $84.9 billion or 0.5%, the largest amount in nine months.
The $56.5 billion increase in real personal consumption expenditures (PCE) in October reflected an increase of $14.3 billion in spending for goods and a $41.4 billion increase in spending for services. Within goods, spending for prescription drugs was the leading contributor to the increase. Within services, the largest contributor to the increase was spending for household electricity and gas.
Both the boost in spending and income were stronger than economists forecasted, and bodes well for future economic growth. Consumer spending is a key metric because it accounts for 70% of economic activity.
One area not experiencing growth was home sales. The National Association of Realtors reported its pending home sales index fell 2.6% last month to 102.1. Contract signings dropped 6.7% from a year ago, an indicator that sales could decline through December.
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- ◦Economy
