A 1.3 percent rise in consumer spending in October in the face of rising inflation gave experts a positive sign in new economic data released Wednesday.
The Commerce Department reported U.S. consumer spending rose by 1.3 percent in October, doubling the 0.6 percent gain from September. Prices, however, rose 5 percent compared with the same period last year, the fastest inflation rate over 12 months since the autumn of 1990.
Personal incomes, one of the premier indicators of future spending, rose 0.5 percent in October following a 1 percent dip in September. The decline was explained by an end to some government support payment programs. The rise is likely explained by companies in severe need of workers, giving employees leverage to ask for raises or higher starting wages.
"After experiencing one of the most severe economic shocks of the past century in 2020, the U.S. economy has displayed one of the most rapid recoveries in modern history in 2021," Gregory Daco, chief U.S. economist for Oxford Economics, wrote in a note to clients.. The quarter beginning with October is expected to help the economy rebound unless the recent rise in COVID cases or increasing inflation slows holiday shopping over the next month.
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