Consumer spending fell to its lowest level since March, due in large part to Americans’ savings drying up compared to the all-time highs that were seen during the Chinese Coronavirus pandemic.
As the Daily Caller reports, the data from the Bureau of Economic Analysis (BEA) shows that consumer spending, which is measured by the personal consumption expenditure (PCE), rose by $41.2 billion in the month of October, a mere 0.2% increase from the previous month. By contrast, September saw a 0.7% increase. The miniscule increase in the PCE is the smallest increase from one month to the next since March, when consumer spending fell by 0.08%.
Concurrent with the decrease in consumer spending was the decline in the total savings collectively held by all Americans. After reaching over $1 trillion in May, that amount has fallen to $768.6 billion in October; the previous record high, as reported by the Federal Reserve Bank of St. Louis, was in April 2020, when Americans had collectively saved $6 trillion, at the onset of the COVID pandemic.
In other economic news, the PCE price index, which serves as the Federal Reserve’s primary measurement of inflation, rose by 3% in October compared to October of 2022. While this is down slightly from the 3.4% increase in September, it is still well above the Federal Reserve’s target inflation rate of 2%. Alongside the overall inflation rate was a rise in service prices and goods, which rose by 4.4% and 0.2% for the month, respectively.
The consumer price index had previously hit its peak at 9.1% in June of 2022, with the October totals thus marking a significant overall decline. As a result, the Federal Reserve has increased its federal funds rate to between 5.25% and 5.50%, the highest level in 22 years.
The ongoing inflation crisis has become the staple of the economy under Joe Biden, which Biden has repeatedly tried to defend as a new system called “Bidenomics.” But despite slight declines compared to record highs in 2021, many prices, ranging from goods to gas, remain stubbornly high compared to record lows under the Trump Administration.