US consumer spending gathers momentum
WASHINGTON: US consumer spending gathered momentum in November as households bought furniture, electronics and a range of other goods, which could further allay fears of a significant slowdown in the American economy even as the outlook overseas continued to darken.
The upbeat data from the Commerce Department on Friday bolstered expectations that the Federal Reserve will raise interest rates for a fourth time this year at its December 18-19 policy meeting, despite moderating inflation and tighter financial market conditions.
It also stood in stark contrast to reports from China showing a dramatic fall-off in retail sales in the world’s second-largest economy and from Europe where a key measure of business activity expanded at its slowest rate in four years.
The US central bank has hiked rates three times this year.
“Today’s report shows Fed officials consumers just aren’t confident, they are also putting their money where the mouths are and buying enough goods to keep the economy humming,” said Chris Rupkey, chief economist at MUFG in New York.
Retail sales excluding automobiles, gasoline, building materials and food services surged 0.9 per cent last month after an upwardly revised 0.7 per cent increase in October.
These so-called core retail sales, which correspond most closely with the consumer spending component of gross domestic product, were previously reported to have gained 0.3 per cent in October. Economists polled by Reuters had forecast core retail sales rising 0.4 per cent last month.
November’s increase in core retail sales and upward revisions to October’s data suggested a brisk pace of consumer spending in the fourth quarter. Consumer spending, which accounts for more than two-thirds of the US economy, increased at a 3.6 per cent annualised rate in the Julyseptember quarter.
The economy grew at a 3.5 per cent pace in the July-september period.