Consumers have long been the engine of the U.S. economy, and that engine revved up in the third quarter. People opened their wallets to buy cars, restaurant meals and vacations. Consumer spending rose at an annual rate of 3.7%, an acceleration from the previous quarter. "The consumer is driving the train, as she has been doing, and the consumer continues to power the economy forward," says Mark Zandi, chief economist at Moody's Analytics.
Consumer spending is largely bankrolled by a healthy job market and solid wage gains, which have been outpacing inflation for well over a year. Employers added more than a half-million jobs during the quarter and unemployment is hovering at a low 4.1%. "As long as people have a job and their wages are rising, that's the basis for continued strong spending," Zandi says.
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