Americans continued spending in October, with personal consumption expenditures picking up even after adjusting for inflation, new data released Thursday showed.
Consumption climbed 0.8 percent in October compared with the prior month, up from a previous gain of 0.6 percent. Adjusted for inflation, spending climbed by 0.5 percent.
While economists expected those gains, they underscore that consumers remain resilient in the face of rapid price increases and rising interest rates. The Federal Reserve has lifted borrowing costs at the most aggressive pace since the 1980s this year, making it more expensive to borrow on a credit card or to buy a car.
Despite that, Americans continue to open their wallets. More recent anecdotal data suggest that the holiday shopping season is off to a strong start: Retail sales over the Thanksgiving weekend were up 10.9 percent from the prior year, excluding cars and not adjusting for inflation, based on Mastercard data.
But people are also becoming more price sensitive as their savings run down and expensive food and gas weigh on family budgets, and stores have begun to discount products again to lure and retain customers. That could help to lower inflation, if it is drastic enough and continues.
Americans are being buoyed in part by a strong labor market that is helping them to take home more money, and by one-time payments from states, some of which have stimulus money left to disperse or are benefiting from strong tax receipts.
Personal income rose by 0.7 percent in October, and 0.4 percent after adjusting for inflation, Thursday’s data showed. That was the biggest inflation-adjusted increase since July.
Personal income includes government social benefits, which helped to boost it this month, “primarily reflecting one-time refundable tax credits issued by states,” the Bureau of Economic Analysis said in its release.