Businesses, consumers increase spending, are more optimistic BloombergConsumers are expected to spend more in the waning months of 2014, especially with gasoline prices plunging.The economy has zigged and zagged repeatedly since exiting recession in 2009, but now it finally appears to be charting a steady course forward. The U.S. is no speedy cigar boat, though. The economy is advancing at a relatively modest pace that’s below its historical average and growth is unlikely to race ahead soon. A raft of reports, such as consumer spending and business investment, in a holiday-shortened week will probably show the economy sticking to its current bearings. Even as investors look toward 2015, the government will offer another glance back at the economy’s performance in late summer and early fall. Economists polled by MarketWatch expect U.S. growth in the third quarter to be ratcheted down to still-healthy 3.3% from 3.5%. The reason: Exports and business investment in plants and offices were probably somewhat weaker than initially reported. Yet the flip side is that consumer spending may have been a bit stronger and there’s no reason to expect a slowdown in the fourth quarter, especially with a steep drop in gasoline prices giving consumers the equivalent of a year-end bonus. That’s good news, since consumer outlays drive more than two-thirds of U.S. economic activity. In October, consumer spending is forecast to rise a solid 0.3% even though household bills for utilities probably declined owing to Goldilocks-like weather — neither too hot nor too cold. Retail sales figures already show that households boosted spending last month at online sellers, sporting-goods stores and clothing outlets, among other things. Just as important incomes likely rose in October for the 10th straight month, adding to evidence that wages are beginning to rise, albeit slowly, after hardly any change in the past four years. The biggest spate of hiring in at least a decade is causing labor shortages in some professions that’s spurring companies to offer higher wages as a lure. “Finally, just maybe, labor compensation is starting to pick up,” said Ethan Harris, global economist at Bank of America/Merrill Lynch. Businesses have also begun to spend more. Investment outside defense and the volatile transportation sector surged during the summer before a surprise dip in September that economists predict will prove short-lived. So-called core orders, a key component of the monthly report on durable goods, are expected to snap back in October. What could potentially upset business plans is slowing growth in China as well as slumping economies in Japan and Europe — key markets for American exports. Investors will watch for clues in the durables report on whether weaker global growth is starting to weigh on the U.S. economy. “The manufacturing sector would likely be the first place where the effects of slower global growth would creep into the U.S. economy, but thus far the factory sector has held up in the face of headwinds,” economists at Wells Fargo wrote. So for now the coast seems clear through the end of the year. Inflation and interest rates remain low. Businesses are still expanding and hiring. And consumers’ spirits have been lifted by rising employment, record stock gains and plunging gasoline prices — indeed a pair of reports this week are likely to show the mood of Americans is the most hopeful since early 2007. Jeffry Bartash