U.S. consumer spending surged in September as households boosted purchases of motor vehicles and traveled, keeping spending on a higher growth path heading into the fourth quarter.

Growth, however, is unlikely to match last quarter's blockbuster performance. Consumer tapped their savings and put away less money with the saving rate dropping to 3.4% from 4.0% in August. Personal income rose 0.3% after gaining 0.4% in August. Income at the disposal of households after accounting for inflation and taxes dropped for a third straight month. "That is not sustainable," said James Knightley, chief international economist at ING in New York. "Savings are finite and are being exhausted at a rapid rate, with various estimates suggesting that excess savings accrued during the pandemic could be exhausted in the first half of next year."

  • xkforce@lemmy.world
    4·
    1 year ago

    The point of keeping rates high was to reduce the amount of money in circulation so it more closely matches the market's demand for money. The more money in circulation and the higher the velocity of money vs the amount of goods produced, the less value money has which manifests as inflation. I find it hard to believe that inflation is increasing given how high the rates are and how fast the money supply dropped (the fastest since the great depression)