Personal Income And Spending Increase By More Than Expected In October

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Wednesday morning, the Commerce Department released its report on personal income and spending in the month of October, showing that income and spending both increased by a little more than economists had been expecting.

The report showed that personal income increased by 0.2 percent in October following a revised 0.2 percent increase in September. Economists had been expecting income to edge up by 0.1 percent compared to the lack of growth originally reported for the previous month.

Additionally, the Commerce Department said that personal spending rose by 0.7 percent in October after falling by 0.6 percent in the previous month. The growth exceeded economist estimates of a 0.5 percent increase in spending.

The report also showed that disposable personal income, or personal income less personal current taxes, rose by 0.4 percent in October following a 0.2 percent increase in September.

With spending increasing at a faster pace than income, personal saving as a percentage of disposable personal income was 4.4 percent in October compared with 4.6 percent in September.

Peter Boockvar, equity strategist for Miller Tabak, noted that while personal income is down 1 percent year-over-year, disposable income is up 2.4 percent compared to a year ago.

Boockvar said this "lends evidence that a reduction in taxes paid is helping to lift the overall savings rate in addition to consumers spending less relative to their income."

"Net-net, while spending numbers looked good, the sustainability comes down to income growth which still remains punk but with hoped for improvement in 2010," he added.

The Commerce Department also said that its reading on core consumer prices, which exclude food and energy prices, rose at an annual rate of 1.4 percent in October, up from the 1.3 percent annual rate of growth reported for the previous month.

Wednesday morning, the Commerce Department released its report on personal income and spending in the month of October, showing that income and spending both increased by a little more than economists had been expecting. The report showed that personal income increased by 0.2 percent in October following a revised 0.2 percent increase in September. Additionally, the Commerce Department said that personal spending rose by 0.7 percent in October after falling by 0.6 percent in the previous month. (Market News Provided by RTTNews)