With personal income and spending, though not on homes, both up and consumer confidence on the increase, the holiday season may be brighter than anticipated.
In figures released Wednesday by the Department of Commerce, income rose 0.5%, or $57.6 billion, in October, and disposable personal income rose 0.4%, or $48.3 billion. Personal consumption also was up 0.4%, or $44 billion, although that spending apparently was not on new homes. Sales of new single-family homes, according to data from the Department of Commerce, fell a hefty 8.1% from September’s numbers. However, the margin for error on that drop is 16.1%, so the actual state of new home sales will have to wait for more precise numbers.
Or perhaps the answer to the home sales drop is in savings. Personal savings increased in October; saving as a percentage of disposable personal income was 5.7% in October, up from 5.6% in September—not much of an increase, but an increase nonetheless.
According to Ian Shepherdson, chief U.S. economist for High Frequency Economics, real spending on utilities dropped 4.8% because of warmer-than-usual weather; however, that drop “was offset by stronger spending on goods, particularly cars and other durables.” Growth in income, he added, supported the October spending, but the wage and salary increase of 0.6%, the highest since May, “looks unsustainable to us.”
In other spending, the durable goods figures released Wednesday by the Department of Commerce indicated drops in new orders, shipments, defense and non-defense spending, and increases in unfilled orders and inventory. While the numbers disappointed—Shepherdson said that the consensus expected an increase of 0.1% rather than a decrease—he pointed out that the September numbers were revised upward, “so net the data for October are nothing like as soft as they appear.”