Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

U.S. personal spending stayed strong in October as price pressures eased

Economic Indicators Dec 01, 2022 08:44AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Geoffrey Smith

Investing.com -- U.S. household spending stayed strong in October amid growing signs that inflation may be easing.

Personal spending rose 0.8% from September, an acceleration from 0.6% in September, and comfortably ahead of a 0.3% rise in the price index for personal consumption expenditures. PCE prices are the Federal Reserve's preferred measure of inflation and the data suggests that the tightening of monetary policy by the Fed over recent months still hasn't stopped U.S. consumers from spending - even if there are increasing signs that they are dipping ever deeper into savings in order to do so: the savings rate fell to 2.3%, the second lowest on record.

Inflation as measured by the PCE prices index has fallen in three of the past four months since peaking in June, and October's increase of 0.3% was below analysts' forecasts for a gain of 0.5%.

After stripping out volatile food and energy components, the ‘core’ PCE price index also rose by less than expected – only 0.2% on the month – bringing the annual core rate down to 5.0% from 5.2% in September.

The numbers broke a sequence of months this year in which spending has failed to keep pace with inflation, and bolstered dwindling hopes that the Federal Reserve can bring inflation down without driving the economy into a recession.

Another sign of the economy's robustness came with a decline in the number of people making initial claims for jobless benefits last week. Initial claims fell to 225,000, from 241,000 the week before. However, continuing claims, a rough proxy for hiring trends, rose by more than expected to 1.608 million, their highest in nine months.

Ryan Sweet, chief U.S. economist with Oxford Economics, wrote in a note to clients that the initial claims numbers - distorted by the Thanksgiving holiday - were "more noise than signal." However, the less volatile four-week average in initial claims continues to signal an extremely tight labor market, despite edging higher to 228,750 from 227,000.

"The tight labor market allows the Fed to continue to increase the target range for the Fed funds rate, and a 50-basis point hike in December appears to be a slam dunk," Sweet said.

The rise in claims over recent weeks has been markedly more gentle than the rise in layoffs visible through anecdotal reports and surveys. The Challenger job cuts survey for October suggested layoffs surged to their highest in two years in October, amid increasingly aggressive cost-cutting by the technology sector in particular. Tech layoffs have tended to affect the better-educated, who have had few problems finding new jobs at a time when there are over 1.7 vacancies for every unemployed person.

U.S. personal spending stayed strong in October as price pressures eased
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Bill Riley
Bill Riley Dec 01, 2022 10:16AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
dailyjobcuts.com
me ish
me ish Dec 01, 2022 9:14AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
so the rate of inflation is still rising and yet there's market optimism as the amount of the increase in the rate of inflation is moving down steadily little by little - that still means inflation is at crazy high levels, every month eroding people's purchasing power - talk about clutching at straws - partly the rally is due to pension fund contriubutions that just get pumped into the markets no matter what, and secondly share buy back schemes - especially Apple's which lifts the whole market - those directors need to get their bonuses based on share price - so they'll do whatever it takes to pump up the share price beyond silly valuations considering the state of the global economy
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email