US consumer spending solidified in October; every week the idle claims fall | So Good News

Consumer spending, which makes up more than two-thirds of US economic activity, jumped 0.8% after an unchanged increase of 0.6$ in September, the Commerce Department said on Thursday. The October gain was in line with economists’ expectations.

Spending last month was boosted by wage gains amid a strong labor market, a one-time tax refund in California, where some households received as much as $1,050 in stimulus checks, and the cost of living for stamp recipients.

The Federal Reserve is in the midst of its fastest rate hike since the 1980s, as it battles rising inflation, adding to risks for the economy next year. Fed Chairman Jerome Powell said on Wednesday that the US central bank could cut interest rates “as far as December.”

That goal was supported by a reduction in inflation last month. The consumer spending index (PCE) rose 0.3 percent after advancing to the same level in September. In the 12 months through October, the PCE price index increased 6.0% after advancing 6.3% in September.

Excluding the perishable food and energy sectors, the PCE price index rose 0.2% after gaining 0.5% in September. The so-called core PCE price index rose 5.0% year-on-year in October after a 5.2% increase in September.

The Fed targets the PCE rate at its 2% inflation target. Some measures of inflation have shown signs of slowing. The annual consumer price index grew less than 8% in October for the first time in eight months.

The Fed has raised its policy by 375 basis points this year from near zero to 3.75%-4.00%.

News on the labor market remained encouraging, although demand for workers is slowing.

A separate report from the Labor Department on Thursday showed that initial jobless claims fell by 16,000 to a seasonally adjusted 225,000 for the week ending Nov. 26. This disturbed some of the operations in the previous week, which encouraged the claims.

While some of the hikes reflect an increase in tech job layoffs, reports are also volatile at the start of the holiday season when companies temporarily close or hire less. Overall, claims remain consistent with pre-epidemic levels. Economists had predicted 235,000 claims last week.

The Fed’s Beige Book on Wednesday said it was “dispersed”

layoffs in November in the technology, finance, and real estate sectors, but he noted that “some interviewees expressed uncertainty about the workforce due to hiring difficulties, even as their labor needs are shrinking.”

A layoff in technology helped fuel the decline in jobs announced by U.S. companies in November, a third report from global firm Challenger, Gray & Christmas showed Thursday. Planned job cuts rose 127% to 76,835 last month.

The technology sector reported 52,771, the largest since 2000. There were also significant increases in the automotive, consumer goods, construction, health care and automotive industries.

Employers have announced a reduction of 320,173 jobs this year, up 6% compared to the same period in 2021. However, the annual number is the second lowest.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)