Consumer spending, income edges higher

WASHINGTON (AP) — American consumers barely increased their spending in October but their incomes rose by the most in seven months. The rise in take-home pay could boost spending during the upcoming holiday shopping season.

The Commerce Department said Wednesday that spending increased 0.1 percent last month, the poorest gain in four months. But incomes increased 0.4 percent, the best showing since March.

Private wages and salaries drove the income gain.

The slight October gain in consumer spending represented a big slowdown from a 0.7 percent September increase. Spending on durable goods such as autos showed a solid increase but spending on nondurable goods such as food and clothing fell.

Some economists predicted spending would slow because consumers spent more over the summer while earning less. Consumer spending is important because it makes up 70 percent of economic activity.

After-tax, inflation-adjusted incomes fell at a 2.1 percent rate over the summer, the biggest drop since the third quarter of 2009, just as the recession was ending.