U.S. consumer spending grew in October as consumers prepared for holiday shopping with inflated prices and continuing supply chain issues.
Household spending increased 1.3% in October compared to the previous month, while personal income grew 0.5%, the Commerce Department said Wednesday.
“The combo of reduced virus concerns and warm weather, easing auto supply chain constraints and an early start to the holiday season boosted consumer outlays in October,” Gregory Daco, chief U.S. economist at Oxford Economics, told the Daily Caller News Foundation.
“Still, all wasn’t rosy for U.S. households as they had to contend with higher inflation, reduced product availability, and diminished fiscal support,” Daco added. (RELATED: America’s Biggest Retailer Will Be Closed On Thanksgiving)
High U.S. inflation explains half of the 1.3% increase in consumer spending in October. But just half. Americans are still buying lots of stuff. Strong report points to a stronger U.S. economy toward the end of 2021 … https://t.co/b7ApBES21A pic.twitter.com/PlYYMAMnwU
— Jeffry Bartash (@jbartash) November 24, 2021
Additionally, consumers are benefiting from a strengthening labor market. Jobless claims dropped to 199,000 in the week ending on Nov. 20, decreasing 71,000 from the week prior and beating experts’ predictions.
The dip in claims reflects higher wages, and more job openings could continue to grow consumer spending and assist in a stronger economic recovery, The Wall Street Journal reported.
“The consumer is still a big driver,” Derrick Fung, chief executive at market research firm Cardify.ai, told the WSJ. “We’re forecasting a very strong holiday season.”
Meanwhile, following a record 4.4 million people quitting their jobs in September, job openings remained at a 10.4 million high as of mid-November.
“Today’s jobless claim figure is evidence of a very tight labor market — firms are increasingly reluctant to lay off workers because it’s a real challenge for them to find replacement workers,” Tyler Goodspeed, an economic fellow at the Hoover Institute, told the Daily Caller News Foundation. “I should add that we have a tight labor market while still 4 million jobs short of where we were in February 2020, and 7 million short of pre-pandemic trend, in large part due to policy mistakes in the last 10 months.”
Inflation continues to soar, climbing to its highest level in 30 years. The Consumer Price Index grew 0.9% in October from the previous month to measure 6.2% higher than October 2020.
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