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http://www.newsmax.com/money/Consumer_Spending_Surges_/2007/12/21/58943.html
Consumer Spending Surges in November
Friday, December 21, 2007
WASHINGTON -- Consumers put aside worries about slumping home sales and
soaring gasoline prices and headed to the malls in November, pushing
spending up by the largest amount in 3 1/2 years.
The Commerce Department reported Friday that consumer spending surged by 1.1
percent last month, nearly triple the October gain. The gain reflected
various promotional efforts by retailers such as heavy discounting and
longer store hours at the start of the holiday shopping season.
The November advance was the biggest one-month jump since a 1.2 percent rise
in May 2004 and was significantly above the 0.7 percent analysts had
expected. Incomes were also up last month, rising by 0.4 percent, double the
October increase but slightly below the advance that had been expected.
An inflation gauge tied to spending showed a 0.6 percent increase in
November, the biggest jump in more than two years, reflecting last month's
big surge in gasoline prices. Excluding energy and food, prices were up 0.2
percent. Core inflation is up 2.2 percent over the past 12 months, above the
upper range of the Federal Reserve's comfort zone of 1 percent to 2 percent.
The big jump in spending came at a critical time for retailers - the start
of the all-important holiday shopping season. But there have been more
recent signs that sales slowed in December.
Consumer spending is closely watched because it accounts for two-thirds of
total economic activity. Many economists believe that overall economic
growth will be at a barely discernible rate of 1 percent in the current
quarter, as the country struggles with the fallout from the housing downturn
and a spreading credit crisis that has made bank loans harder to get for
individuals and businesses.
While the risks of a recession have risen, the Federal Reserve is fighting
to avert a full-blown downturn by cutting interest rates. It has not been as
aggressive as financial markets want, however, because of Fed worries about
inflation pressures.
The 1.1 percent rise in consumer spending followed a 0.4 percent rise in
October. Excluding the effects of inflation, spending would have risen by
0.5 percent, the best showing for inflation-adjusted spending in 11 months.
After-tax incomes were up 0.3 percent in November, but after adjusting for
inflation, incomes actually fell by 0.3 percent after a 0.2 percent drop in
October. Democratic presidential candidates, hoping to make the economy an
issue in next year's contest, have been stressing the weak gains in incomes
as an example of failed Republican policies.
With spending rising at a faster rate than savings, the nation's savings
rate dipped into negative territory in November at 0.5 percent. That meant
that households spent all of their incomes and either dipped into savings or
borrowed to finance the higher level of spending last month.
Consumer Spending Surges in November
Friday, December 21, 2007
WASHINGTON -- Consumers put aside worries about slumping home sales and
soaring gasoline prices and headed to the malls in November, pushing
spending up by the largest amount in 3 1/2 years.
The Commerce Department reported Friday that consumer spending surged by 1.1
percent last month, nearly triple the October gain. The gain reflected
various promotional efforts by retailers such as heavy discounting and
longer store hours at the start of the holiday shopping season.
The November advance was the biggest one-month jump since a 1.2 percent rise
in May 2004 and was significantly above the 0.7 percent analysts had
expected. Incomes were also up last month, rising by 0.4 percent, double the
October increase but slightly below the advance that had been expected.
An inflation gauge tied to spending showed a 0.6 percent increase in
November, the biggest jump in more than two years, reflecting last month's
big surge in gasoline prices. Excluding energy and food, prices were up 0.2
percent. Core inflation is up 2.2 percent over the past 12 months, above the
upper range of the Federal Reserve's comfort zone of 1 percent to 2 percent.
The big jump in spending came at a critical time for retailers - the start
of the all-important holiday shopping season. But there have been more
recent signs that sales slowed in December.
Consumer spending is closely watched because it accounts for two-thirds of
total economic activity. Many economists believe that overall economic
growth will be at a barely discernible rate of 1 percent in the current
quarter, as the country struggles with the fallout from the housing downturn
and a spreading credit crisis that has made bank loans harder to get for
individuals and businesses.
While the risks of a recession have risen, the Federal Reserve is fighting
to avert a full-blown downturn by cutting interest rates. It has not been as
aggressive as financial markets want, however, because of Fed worries about
inflation pressures.
The 1.1 percent rise in consumer spending followed a 0.4 percent rise in
October. Excluding the effects of inflation, spending would have risen by
0.5 percent, the best showing for inflation-adjusted spending in 11 months.
After-tax incomes were up 0.3 percent in November, but after adjusting for
inflation, incomes actually fell by 0.3 percent after a 0.2 percent drop in
October. Democratic presidential candidates, hoping to make the economy an
issue in next year's contest, have been stressing the weak gains in incomes
as an example of failed Republican policies.
With spending rising at a faster rate than savings, the nation's savings
rate dipped into negative territory in November at 0.5 percent. That meant
that households spent all of their incomes and either dipped into savings or
borrowed to finance the higher level of spending last month.
