Consumer spending rose for a second straight month in November as incomes recorded their biggest gain in six months, according to a report issued by the Commerce Department today.
The Commerce Department said spending increased 0.5 percent after rising by a slightly downwardly revised 0.6 percent in October. Consumer spending in October was previously reported to have increased 0.7 percent.
Today’s report showed spending adjusted for inflation rose 0.2 percent in November, adding to the prior month’s 0.4 percent gain. Personal income increased 0.4 percent last month, the largest increase since May, after rising 0.3 percent in October.
While consumer spending is key to the recovery, it remains to be seen whether the past couple of months will have much of an impact. There are strong seasonal factors attached to recent numbers; and, nothing has changed positively on the employment front, notwithstanding fewer headcount reductions in recent months.
The data clearly was the latest evidence that households were starting to feel a bit more comfortable spending after a long period of restraint following the most painful U.S. recession in 70 years, but it is not at all clear that gains will be sustained without the support of government stimulus programs. The economy, as measured by the Gross Domestic Product, grew at an annual rate of 2.2 percent in the third quarter as government programs such as the popular “cash for clunkers” bolstered spending.
Data early this month showed a strong rise in retail sales in November, with gains spread across nearly all categories.
Real disposable income climbed 0.2 percent in November after rising by the same margin in October. The rise in income saw savings increasing to an annual rate of $525.1 billion, but the savings rate was unchanged at 4.7 percent from the prior month.
Commerce Department data also showed the personal consumption expenditures price index, excluding food and energy, rising 1.4 percent from a year ago in November. The index, which is a key inflation gauge monitored by the U.S. Federal Reserve, increased 1.4 percent in October.
