WASHINGTON (AP) -- The Commerce Department reports how much consumers spent and earned in October. The report will be released at 8:30 a.m. EST Friday.
MODEST GAINS: The forecast is that consumers increased spending 0.2 percent compared with September, according to a survey by FactSet. The expectation is that income rose 0.3 percent in October after a 0.5 percent rise in September.
WEAK GROWTH: Income growth has been weak for a number of years as the country has struggled with a prolonged period of high unemployment following the Great Recession.
SLOW RECOVERY: The weak income growth has kept consumer spending at modest levels, meaning that the economic recovery has not been able to gain momentum since consumer spending accounts for 70 percent of economic activity.
The economy grew at a 3.6 percent annual rate from July through September, the fastest since early 2012, but nearly half the growth came from a buildup in business stockpiles, a trend that could reverse in the current quarter and hold back growth.
When excluding inventories, the economy grew at a 1.9 percent rate in the third quarter, down from 2.1 percent in the spring. That's in line with the same subpar rate that the economy has seen since the Great Recession ended four years ago.
Many economists believe overall economic growth will dip below 2 percent in the current October-December quarter, in part because a slowdown in inventory building will act as a drag on activity.
But some analysts saw encouraging signs in the report on overall economic growth suggesting signs of strength, particularly in a second quarter in which after-tax incomes strengthened after a big drop in the first three months of the year which reflected higher federal taxes which went into effect in January.
In the third-quarter, consumers increased their spending at a tepid 1.4 percent annual rate. That was the slowest since the final quarter of 2009, a few months after the recession officially ended.
But the spending activity in the third quarter was held back by flat spending on services. That may have reflected an unusually mild summer, which cut demand for air conditioning. One hopeful sign: Consumers spent on goods at the fastest rate since early 2012.
Some reports have offered some promise that the fourth quarter could be stronger than many economists are predicting.
Spending at retail businesses rose solidly in October and car sales rose 9 percent to an annual rate of 16.4 million in November, the best performance of the year.
But early reports on holiday shopping have been disappointing. The National Retail Federation estimates that sales over the four-day Thanksgiving Day weekend — arguably the most crucial shopping stretch for retail businesses — fell for the first time since the group began keeping track in 2006.
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