Income and Spending Increase Slightly
By DAN ARNALL
December 1, 2005
Commerce Department Report Shows Personal Income and Spending Picked Up in October
Dec. 1, 2005 — The Commerce Department released a report today showing that Americans' incomes and spending increased slightly in October.
Data showed incomes rose 0.4 percent during the month after several months of strong gains pushed along by insurance payouts from the hurricanes in the Gulf. Spending saw a modest 0.2 percent increase during the month. Both indicators were in line with economists' expectations.
The report also contains one of the Fed's favorite inflation gauges. It showed core prices — excluding volatile food and energy — up by 1.8 percent in the 12 months prior. This is a modest pace, which will likely quell growing concerns that the Fed will continue to raise interest rates well into 2006.
The nation's personal saving rate remained very poor. It came in at an astoundingly low minus 0.7 percent for October. Could the day of reckoning for the U.S. lack of savings be coming soon? Many economists think so.
What does it mean? Today's report is generally positive and expected.
The inflation measure is a positive for future interest rate hikes, but does not change expectations that the Fed governors will increase rates at their Dec. 13 meeting by a quarter-point — the 13th time they've done that since June 2004.
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