Consumer spending shows solid growth in November as incomes also rise
People walk in a shopping district in lower Manhattan in New York City on Nov. 17.
Consumer spending, a key driver of the U.S. economy, showed solid growth last month to kick off the holiday shopping season as incomes also kept rising, the Commerce Department said Wednesday.
After spending stagnated in October, Americans opened their wallets wider last month. Consumer spending increased 0.3% in November, in line with economists’ forecasts.
Income growth slowed a bit, increasing 0.3% in November. Incomes had increased 0.4% the previous month.
Still, November was the eighth straight month that incomes rose, an encouraging sign for the economic recovery.
The combination of increased spending and slightly slower income growth led consumers to save at a slower pace. The percentage of disposable income saved ticked down to 5.5% in November, though still a relatively high number.
Inflation remained low, with a key price index increasing less than 0.1% in November. For the 12 months ended Nov. 30, prices increased just 0.4%.
A major factor in the recent low inflation has been a steep drop in oil costs. Excluding volatile energy and food, so-called core prices increased 1.3% for the 12 months ended Nov. 30.
Federal Reserve policymakers want to see annual inflation of 2%. Convinced that low inflation is a temporary result of the drop in oil prices, Fed officials last week increased a key interest rate for the first time since 2006.
Some of November’s consumer spending data was inadvertently released Wednesday night, according to the Commerce Department’s Bureau of Economic Analysis.
“BEA will take steps to ensure that this does not happen again and will take all appropriate action to safeguard economic data,” the agency said.
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