We learned a lot about the health of the U.S. consumer this week: The Bureau of Economic Analysis reported that in October, spending rose compared to the month before. It was a slower increase than in September, but an increase nonetheless. Meanwhile, people’s disposable personal income rose at a faster pace than in the previous month, after accounting for inflation.

In other words, wage growth is continuing to light a fire under the U.S. economy.

People’s incomes, on average, have been growing at a faster pace than inflation for about two years now. But Ryan Sweet, chief U.S. economist at Oxford Economics, said income growth has been fairly slow throughout a lot of this year.

“We saw hiring kind of get ratcheted back. The unemployment rate rose a little bit. And I think that puts some downward pressure on wages and salaries,” he said.

That’s why, Sweet said, it was an encouraging sign that disposable income growth picked up last month.

“If this were to continue, that would be a clear indication that the consumer has firepower heading into next year to continue to spend,” he said.

There are some factors that could limit spending next year: Menzie Chinn, a professor of economics and pulic affairs at the University of Wisconsin, said delinquency rates have been rising and some consumers don’t have a lot of savings to fall back on.

“Those have been largely depleted, particularly among those income groups that are, let’s say, at median or below median income,” he said.

Chinn said that means people with lower incomes might hold back next year, while people with higher incomes keep on spending.

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