Consumer spending rebounds in October following 2 lackluster months
Thursday, November 30th 2006, 8:00 am
By: News On 6
WASHINGTON (AP) _ Shoppers picked up their pace in October after two lackluster months, brightening retailers' prospects for a good holiday season.
The Commerce Department reported that consumer spending increased by 0.2 percent in October, the best showing in three months. Spending had fallen by 0.2 percent in September and posted only a slight 0.1 percent rise in August.
The spending increase was bolstered by continued solid growth in incomes, which rose by 0.4 percent in October, reflecting solid employment growth that pushed the jobless rate to a five-year low.
In other economic news, the number of Americans filing new claims for unemployment benefits posted an unexpectedly large increase last week, rising by 34,000 to 357,000, the Labor Department reported.
The four-week moving average for claims, which is designed to smooth out week-to-week fluctuations, rose by 7,250 to 325,000, the highest level since June 3.
The Federal Reserve is hoping that its two-year campaign to raise interest rates will cool consumer spending and the overall economy enough to keep inflation under control but not do so much damage that it pushes the country into a recession.
On the inflation front, a price gauge linked to consumer spending and closely watched by the Fed posted a 0.2 percent rise in October. That was the same as September, but down from a 0.3 percent jump in August. This price barometer, which excludes food and energy, is up 2.4 percent over the past year, still higher than the Fed's comfort zone.