Consumer spending up 0.4% in November
Published: Thursday, December 27, 2012 at 11:46 a.m.
Last Modified: Thursday, December 27, 2012 at 11:46 a.m.
Consumers spent and earned more in November, reflecting a rebound from the disruptions caused by Superstorm Sandy.
The Commerce Department said last Friday that consumer spending rose 0.4 percent compared with October. Personal income jumped 0.6 percent, the biggest gain in 11 months.
Economists noted that the spending and income growth in November was a healthy sign for the economy, especially in the midst of anxiety and uncertainty from the stalemate in Washington over the fiscal cliff.
Wages and salaries rose $41 billion in November. Sandy had reduced wages at an annual rate of $18 billion in October. Spending had fallen 0.1 percent in October compared with September.
With income rising faster than spending, the saving rate rose to 3.6 percent of income in November. That was up from 3.4 percent in October.
Concerns have been rising that income growth has been too weak to support sustained increases in spending, especially when Americans are worried about possible tax increases in the new year from the "fiscal cliff." That's the name for automatic tax increases and spending cuts due to take effect in January unless Congress and the Obama administration reach a budget deal before the new year.
Consumer spending is closely watched because it accounts for about 70 percent of economic activity.
A separate government report last Friday showed that orders to U.S. factories for nondurable goods rose a solid 0.7 percent in November. And a key category that tracks business investment spending gained sharply for a second straight month.
"Despite concerns about the fiscal cliff, businesses appear to have boosted spending at year-end," said Sal Guatieri, senior economist at BMO Capital Markets.
He said his forecast that the economy would grow at an annual rate of 1.5 percent in the October-December quarter might need to be revised higher.