US consumer spending rose more than expected in September, keeping it on a higher growth path entering the fourth quarter, while monthly inflation rose.
The Commerce Department’s Bureau of Economic Analysis reported today that consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.7 percent last month. August data was not revised and still showed a 0.4 percent rise in spending.
Economists polled by had expected spending to increase by 0.5 percent. The third-quarter GDP report published yesterday, Thursday, included these data. The report showed consumer spending accelerating sharply, contributing to the economy growing at the fastest pace in nearly two years.
While the strong growth rate in consumer spending is unlikely to be sustainable, the strong turnaround in the fourth quarter bodes well for fourth-quarter spending amid mounting challenges. Consumer spending is driven by strong wage growth and families withdrawing what they saved during the Covid-19 pandemic.
The personal consumption spending index rose 0.4 percent in September after rising by the same margin in August.
Excluding the volatile food and energy components, the personal consumption expenditure index rose 0.3 percent after rising 0.1 percent in the previous month.
The core personal consumption expenditure index rose 3.7 percent year-on-year in September. This was the smallest increase in more than two years and follows a 3.8 percent increase in August.
