US consumers dug deeper into their wallets in October as personal spending outpaced income growth for the first time since the summer, the US government said today in a report that could boost prospects for economic growth ahead.
Personal consumption rose 0.4 per cent in October, reversing a 0.4 per cent decline in September. Personal income rose 0.1 per cent last month.
October was the first month since July that consumer spending, which accounts for roughly two-thirds of US economic activity, outpaced the rate of growth for personal income.
The spending gain was larger than Wall Street analysts had been expecting and may boost forecasts for fourth-quarter economic growth.
The fitfulness of the US economic recovery since the start of the year, coupled with worries about a possible conflict with Iraq, have been a drag on consumer confidence.
In another sign consumer worries may be easing, the saving rate also fell in October. Saving as percentage of disposable income fell to 4.2 per cent from 4.4 per cent in September.