US consumer spending and incomes up in November

Back to the inflation: The so-called PCE Price Index was just 0.0% on the headline for the monthly change.

Consumer spending, which accounts for about 70 percent of USA economic activity, rose 0.3 percent last month after increasing at less than 0.1 percent in October according to revised data.

The November rise in consumer spending, which accounts for more than two-thirds of US economic activity, was a welcome sign for an economy that had down shifted in the third quarter. “It should also be supportive of the first quarter”.

Investors may have not had much reaction here since some of the personal consumption expenditures (PCE) data had been inadvertently released on Tuesday night. The only number issued ahead of time was the current value of household outlays. The statement didn’t say how long the data had been public before the mistake was discovered. Consumer spending increased 0.3% in November, in line with economists’ forecasts. A price index for consumer spending was unchanged after nudging up 0.1% in October.

Wages and salaries rose 0.5 per cent in November following a 0.6 per cent gain the prior month. The personal saving rate slipped to 5.5 per cent in November from 5.6 per cent a month earlier but remained at the second-highest level since the start of 2013. It showed consumer spending increased 0.3% last month after being unchanged in October. Inflation hasn’t reached the Fed’s 2 per cent goal since April 2012.

Growth estimates for the final three months of the year have been hovering around a 2 percent rate, the same pace as growth in the third quarter. The category, which includes tourism, legal help, health care, and personal care items such as haircuts, is typically hard for the government to estimate accurately. Solid household spending in the latest months have facilitated the economy to advance steadily in spite of the numerous hindrances, comprising a robust dollar and weak overseas demand that have poked American factories.

Inflation looks or sounds a tad better on the annualized basis. Excluding defense hardware, durable goods bookings fell 1.5 percent.

A separate report from the Commerce Department showed that durable goods orders were virtually unchanged in November after surging up by 2.9 percent in October. Many economists believe the Fed will raise rates three or four times in 2016.

Consumers are benefiting from a strengthening job market, with the unemployment rate at a more than seven-year low of 5 per cent. Steady hiring brought the average monthly pace of payrolls this year through November to 210,000, after a 260,000 average for all of 2014 that was the strongest in 15 years.