The October increase in consumer spending followed a much larger 0.9 percent rise in September, the Labor Department reported Thursday. The September climb had been the biggest in eight years. The rise in incomes last month matched the September result, with both months showing the best performance since February.
The October gain in spending after the surge in September was viewed as evidence of good momentum behind consumer spending, which accounts for 70 percent of economic activity, at the start of the fourth quarter.
"The economy is at full employment and more workers means more paychecks to be spent at the shops and malls," said Chris Rupkey, chief financial economist at MUFG Union Bank in New York.
A key measure of inflation rose 1.6 percent over the last 12 months. That is still below the Federal Reserve's target for inflation of annual price increases of 2 percent and represented a slip from a 12-month gain of 1.7 percent in September.
Inflation has been below the Fed's 2 percent target for more than five years. Federal Reserve Chair Janet Yellen told a congressional committee this week that there were good reasons for the decline before this year - a deep recession, a strong dollar holding down import prices and a big fall in oil prices. But she said the shortfall in inflation this year was something of a mystery.
However, she maintained that she still believed inflation would resume rising toward the Fed's 2 percent goal. The central bank is expected to hike its key policy rate for a third time when it meets in December.
The 0.3 percent rise in consumer spending came despite the fact that spending on durable goods such as autos actually fell 0.1 percent last month. That decline was offset by a 0.2 percent increase in spending on nondurable goods - items such as clothing and food not expected to last three years - and a 0.3 percent increase in spending on services, a category that covers such things as doctor's visits and utility bills.
The personal saving rate rose to 3.2 percent of after-tax income in October, up from 3 percent in September.
After a lackluster start to the year, the overall economy picked up in the spring with growth, as measured by the gross domestic product, rising at 3.1 percent rate in the second quarter and 3.3 percent in the third quarter. It marked the first back-to-back quarterly gains above 3 percent in three years. Economists believe growth will slow a bit in the current October-December quarter but still remain close to 3 percent.
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