October saw a rise in consumer spending, according to a report by Reuters.
The news organization is reporting that the economy will most likely continue to grow in Q4 of the year. Consumer spending accounts for upwards of 66 percent of U.S. economic activity, and it went up 0.3 percent as people spent on things like gas and electricity, which helped to offset a dip in car buying.
In September, consumer spending rose 0.2 percent.
The increase in spending and a steady business investment sector indicate that the economy could grow as much as 2 percent.
In Q3, the economy grew 2.1 percent at an annualized pace. The first quarter saw a growth rate of 3.1 percent.
Interest rates were cut a third time this year as well. Personal consumption expenditures (PCE), buoyed by food, energy goods and services, went up 0.2 percent. Through October, it was up 1.3 percent. The PCE index is how the Fed measures inflation, and it was under the U.S. central bank’s 2 percent target.
If consumer spending is adjusted for inflation, it went up 0.1 percent in October, after a 0.2 percent increase in September.
Because of drops in interest income and farm proprietors’ income, personal incomes didn’t change in October. They rose 0.3 percent in September. Wages were up 0.4 percent in October, after climbing 0.1 percent in September.
A $7.2 billion adjustment to account for General Motors strike pay boosted wages, as did payments tied to a reworked contract with members of the United Automobile Workers Union. Because spending is outpacing income growth, savings were down to $1.29 trillion from $1.34 trillion in the month of September.
Also, economic uncertainty and fear of the unknown have prompted big businesses to pull the plug on investments and reduce spending, but overall U.S. business activity is starting to show signs of rebounding as global economies slow down from previous years.