October Consumer Spending Higher Than Expected

Washington, DC, Nov. 25, 2009--The Commerce Department reported Wednesday that consumer spending rose 0.7 percent last month, following a pullback in September when spending plunged 0.6 percent.

It was the best showing since a big 1.3 percent jump in August when the government's now-defunct Cash for Clunkers programs enticed people to buy cars.

Incomes rose 0.2 percent for the second straight month.

The rebound in spending shows that consumers -- who power 70 percent of national economic activity -- are managing for now to hold up under the weight of some heavy negative forces.

The fear among Federal Reserve officials and other economists is that negative forces -- including rising unemployment and hard to get credit, which makes it difficult to finance homes, cars and appliances -- will eventually cause consumers to turn more cautious, making for a lethargic recovery.

Still, Wednesday's figures seemed to blunt fears that consumers could hunker down.

The increase in consumer spending in October was bigger than the 0.5 percent rise economists expected.

Consumers spent more on costly "durable" manufactured goods -- such as cars and appliances -- last month. Such spending rose 2.1 percent, compared with a 8.5 percent drop in September.