Consumer spending probably climbed in October as incomes grew by the most since May, indicating the biggest part of the U.S. economy will bolster the recovery, economists said a report will show this week.
Purchases rose 0.3 percent last month, according to the median estimate of 69 economists in a Bloomberg News survey before Commerce Department figures due on Nov. 23. Incomes also climbed 0.3 percent, the report may show.
An October gain in household spending, which accounts for about 70 percent of the economy, bodes well for the holiday shopping season that kicks off this week. Improving demand and the year-end expiration of a tax break may also spur companies to buy more equipment in the final months of 2011, helping the U.S. weather the effects of Europe’s debt crisis.
“This quarter is getting off to a good start,” said Omair Sharif, an economist at RBS Securities Inc. in Stamford, Connecticut. “Consumers are continuing to spend. Business investment is still helping to drive the recovery” at a time when “there are a lot of risks, especially from Europe.”