The Commerce Department released a report on Thursday showing U.S. personal income increased by more than expected in the month of October.
The report said personal income climbed by 0.7 percent in October after rising by 0.4 percent in September. Economists had expected another 0.4 percent increase.
The stronger than expected personal income growth primarily reflected increases in compensation and government social benefits.
Disposable personal income, or personal income less personal current taxes, also increased by 0.7 percent in October after edging up by 0.3 percent in September.
The Commerce Department said personal spending also advanced by 0.8 percent in October after climbing by 0.6 percent in September. The increase matched economist estimates.
Real personal spending, which excludes price changes, rose by 0.5 percent in October following a 0.3 percent uptick in September.
With spending increasing by slightly more than income, personal saving as a percentage of disposable personal income dipped to 2.3 percent in October from 2.4 percent in September.
“Solid income growth is keeping consumers in a spending mood even as soaring inflation and high interest rates make them feel depressed about the economic environment,” said Oren Klachkin, Lead U.S. Economist at Oxford Economics.
He added, “Looking ahead, we look for the job machine to slow and then eventually jam as the economy slips into a recession in 2023.”
Meanwhile, a reading on inflation said to be preferred by the Federal Reserve showed core consumer prices, which exclude food and energy prices, edged up by 0.2 percent in October after climbing by 0.5 percent in September. Economists had expected prices to rise by 0.3 percent.
The annual rate of core consumer price growth also slowed to 5.0 percent in October from 5.2 percent in September, coming in line with estimates.
“Inflation is still hot but has moderated recently, which will allow the Fed to reduce the size of its rate hikes, starting at the December Federal Open Market Committee meeting,” Klachkin said. “Still, a pause in the tightening cycle is far off on the horizon.”