Personal Income and Spending Up Marginally

Washington, DC, December 1, 2005–Personal incomes and spending rose modestly in October while inflationary pressures eased, according to the Commerce Department.

Personal incomes increased 0.4% in October, as expected, after a 1.7% gain in September that was skewed by the impact of Hurricane Katrina. Spending increased 0.2% in October.

Real (inflation-adjusted) spending increased 0.1% in October, the first increase in three months. Real spending had declined 0.4% in September.

Consumer prices rose 0.1% in October after soaring 0.9% in September. Prices have risen 3.3% in the past year, compared with a 3.7% rate in September.

The core personal consumption expenditure price index increased 0.1% in October, bringing the year-over-year increase down to 1.8% from 2% in September. It’s the smallest year-over-year gain since February 2004.

Incomes from wages and salaries increased 0.6% in October, the biggest gain in three months. Proprietors’ income fell 0.2% after soaring 4.8% in September. Income from assets rose 0.6%, including a 1% rise in income from dividends.

With incomes rising faster than spending, the personal savings rate improved to negative 0.7% from negative 0.8%. The record low was in August at negative 2.2%. The savings rate has been negative for six of the past seven months.