While at a slower pace than originally projected, consumers increased their spending in October while incomes grew at their fastest pace since March, according to data released Wednesday by the Commerce Department.
Overall, the figures suggest confidence is improving as the holiday season approaches. Furthermore, it may mean lenders are leveraging improved consumers credit risk management tactics to cushion themselves against losses. Specifically, purchases increased by 0.1 percent last month, following a 0.7 percent surge the month before. Bloomberg economists had projected an increase of 0.3 percent on the month. Meanwhile, incomes grew by 0.4 percent, while savings climbed from a four-year low. "Consumer spending is a key component of the economy, though it has not been strong enough to generate fast overall growth through most of the recovery," report Eric Morath and Tom Barkley for The Wall Street Journal. "American's willingness to spend during the final three months of the year will likely determine if fourth quarter economic growth exceeds the downwardly revised 2.0 percent gross domestic product growth figure reported Tuesday." Thomson Reuters and the University of Michigan also reported a gain in consumer sentiment for October on Wednesday.