Consumers continued to spend more than they earned in October, the Commerce Department said Wednesday.
Personal incomes rose 0.4 percent in October, while spending rose 0.5 percent. Disposable incomes rose 0.5 percent. Consumers spent $11.9 billion more than their disposable incomes, a 0.2 percent dissavings rate.
Separately, the Labor Department reported Wednesday that the number of Americans filing first-time claims for unemployment benefits dipped 39,000 last week to 300,000. The jobless claims are at their lowest level since late September.
The drop was much larger than economists expected. A Labor Department spokesman said easonal factors typical of the holidays may help to explain the decline.
September and October are the only months at least since the late 1950s and likely since the Great Depression that Americans have spent more than they made.
Wall Street economists were expecting incomes to rise 0.4 percent and spending to rise 0.6 percent.
In October, incomes rose $31.3 billion to an annual rate of $7.21 trillion while disposable incomes increased $28 billion to an annual rate of $6.096 trillion, the biggest percentage gain since August 1997. Outlays increased $29.4 billion to an annual rate of $6.107 trillion.
The big gains in income came from a $18.6 billion boost in wages and salaries, mostly from service industries. Manufacturing payrolls fell $900 million. Proprietors' income rose $4.8 billion, while income from dividends rose $1 billion and income from interest rose $1.4 billion.
Much of the increase in spending came on purchase of durable goods, which rose $16.2 billion. Spending on nondurable goods rose $7.8 billion and spending on services increased just $5.5 billion
Although many economists and policymakers have long worried about the slow steady decline in the U.S. savings rate, the negative trend in September and October holds no special economic significance.
Consumers can dissave if they finance current consumption out of savings or credit or if they sell assets. The government's numbers are slightly disingenuous because they ignore capital gains as income. Instead, capital gains are treated as increases in wealth whether they are realized or reinvested. This definition undercounts both income and savings.
In the current domestic and global economy, American consumers have been given the task of spending as much as they can to keep demand as high as possible. So far, consumers have been doing their patriotic duty without complaint.