Consumer Spending Flat in October

by: Roy Mehta

The Commerce Department reported Friday consumer spending grew less than expected, while incomes increased at its weakest pace since March. Consumer spending increased 0.2% in nominal terms and was flat after taking inflation into account. Despite strong job growth, nominal incomes climbed just 0.2%, and after adjusting for a 0.3% rise in prices, real after-tax incomes actually dropped 0.1%. Both the spending and income growth figures were slightly less than economists' predictions. Though the numbers do show signs of a weakening economy, they should also put more pressure on the Fed to lower interest rates at its December 11th meeting. Inflationary figures were steady in October, as the personal consumption expenditure price index increased 0.3% and is now up 2.9% for the year. Core inflation, however, came in at 1.9% over the past year, with in the Fed's unofficial comfort zone. Futures traded higher before the open, as the market shrugged off the weak economic data, and is anticipating another rate cut after Fed Chairman Bernanke's speech last night (full story).

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.