(CN) — Consumers increased their spending in October at the fastest pace in seven months, the Commerce Department said Thursday.
The government went on to say that personal incomes also rose in October by the largest amount in nine months.
But Thursday morning’s rosy economic report stood in stark contrast to what President Donald Trump has been saying about the economy in recent days.
Trump has been lambasting Federal Reserve Chairman Jerome Powell this week, blaming his choice to lead the central bank for a series of ominous developments including the volatility of the stock market and impending plant closures by General Motors.
Those developments and the trends they portend have bolstered the belief among economists that the U.S. economy will slow down and potentially slip into a recession prior to the 2020 presidential election.
Trump appointed Powell, a Republican, to lead the Fed in November 2017, and he was confirmed to replace former Fed Chairwoman Janet Yellen, a Democrat, in January.
But since then Powell has charted a course markedly at odds with the Trump’s preferences, gradually raising interest rates to keep the economy from over-heating.
Trump wants interest rates kept low, seeing lower rates as a vital economic stimulus.
In an interview with The Washington Post on Tuesday, the president said he’s “not even a little bit happy” with his selection Powell.
“I’m doing deals, and I’m not being accommodated by the Fed,” Trump told the Post. “They’re making a mistake because I have a gut, and my gut tells me more sometimes than anybody else’s brain can ever tell me.”
Powell responded to the president’s criticism in a speech he gave to the Economic Club of New York on Wednesday.
“The interests of households and businesses, of savers and borrowers, were no longer best served by such extraordinarily low rates,” Powell said.
“Our gradual pace of raising interest rates has been an exercise in balancing risks,” he said, among them the risk of runaway inflation.
Thursday’s morning’s report from the Commerce Department suggests the Fed’s approach is working.
While consumer spending rose in October at a rate that was three times faster than the 0.2 percent rate post in September, the inflation rate tied to consumer spending posted a 2 percent rise in October compared to a year ago, hitting the Federal Reserve’s annual target for inflation.
Excluding volatile food and energy costs, inflation has posted a 12-month gain of 1.8 percent in October, down from a 1.9 percent September advance.
Federal Reserve Chairman Jerome Powell ignited a big rally on Wall Street on Wednesday with a speech which investors read as a signal that the central bank may slow the pace of interest rate hikes next year.
In the wake of Powell’s comments the Dow Jones Industrial Average surged 617 points, its biggest one-day increase in eight months.
The Fed has boosted rates three times this year and is expected to increase rates a fourth time in December.
The rise in spending in October reflected strong gains in purchases of durable goods, items such as autos expected to last at least three years, and non-durable goods and services such as utility payments.
After adjusting for inflation, the spending increase was a still-strong 0.4 percent, up from a tiny 0.1 percent inflation-adjusted rise in September.
The advance in personal incomes included a 0.3 percent rise in wages and salaries.
The faster increase in spending compared to income growth left the saving rate at 6.2 percent of after-tax income, down slightly from 6.3 percent in September.
The Associated Press contributed to this report.