U.S. consumer spending surges, outpacing income growth in September
2023.10.27 15:21
In a significant boost to the U.S. economy, consumer spending surged by 0.7% in September, surpassing analysts’ expectations of a 0.5% increase. This robust growth contributed to a 4% expansion in Q3 outlays, the highest level since 2019 excluding pandemic years.
The increase in consumer spending was broad-based, spanning sectors such as travel, healthcare, housing, automobiles, prescription drugs, and gasoline. This surge reflects the rising cost of necessities and led to a moderate 0.4% rise in inflation-adjusted consumer spending.
Despite the encouraging spending figures, incomes increased by a modest 0.3% and have been on a downward trajectory for three months when adjusted for inflation. The savings rate also dropped from 4% post-pandemic to 3.4%, indicating reduced financial security for households.
The Personal Consumption Expenditures (PCE) price index, a key measure of inflation, climbed by an unexpected 0.4% in September.
On the market front, both the DJIA and SPX opened slightly higher following this news. Meanwhile, the yield on the 10-year Treasury note TMUBMUSD10Y rose to 4.89%.
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