Consumer incomes rose faster than expected in October, according to the Department of Commerce.
Personal income increased by 0.6% (0.4% forecast,) boosted by higher employee compensation and interest on investments.
Spending gained by 0.3% (0.5% expected.) Consumers deferred some of their spending, with the rate of savings as a share of disposable income rising to 6% from 5.7%.
The second estimate of Q3 gross domestic product released on Tuesday was revised higher, to a 3.2% pace from 2.9%. This was mostly due to new data that reflected stronger consumer spending than previously thought.
The report also included data on personal consumption expenditures, a key measure of spending that also reflects price changes.
Core PCE, which excludes the volatile costs of food and energy, rose 0.1% month-on-month, and 1.7% year-on-year, as economists expected. The annualized change remains below the Federal Reserve’s 2% target of inflation, although the core consumer price index has crossed that threshold. The Fed prefers core PCE.