Heading into the holiday season, Americans are showing they're still willing to spend money and grow the economy.
The Commerce Department released its latest consumer spending report Friday, showing gains in auto sales, electronics, and restaurants and bars.
This is good news for the economy. The increases were slightly smaller than the increases from August to September, but the numbers show Americans aren't afraid to spend on core items like groceries, or discretionary items they want.
Consumer spending grew 0.4% from September to October — strong signs for a growing economy that has seen inflation fall from 9.1% to 2.6% in just over two years. That's close to its pre-pandemic levels.
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"I think we've seen a major disconnect between consumer confidence and consumer spending," said Mark Mathew, the executive director of research at the National Retail Federation.
Mathew points out despite historically low confidence in the economy and prices, Americans are still spending. The largest gains came in auto sales at 1.6%, electronics and appliances at 2.3% and restaurants and bars at 0.7%. Mathews points to rising wages as the main factor behind gains.
"You know, consumers are spending what's in their wallets, not what's in their heads," Mathew said. "We've had real growth in wages. So, wages have exceeded inflation and that's a positive."
The data comes on the heels of Donald Trump's election victory in which he promised to knock down prices even further, and before a critically important holiday season for small businesses that rely on the spending to meet their yearly revenue numbers.
Mathews also notes the spending comes at a time when Americans are saving less. Numbers from the Bureau of Economic Analysis show the personal savings rate was 4.6% in September, a consistent monthly decrease from its high of 5.2% in June.
