Consumer Spending, Personal Income Up in November

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Shopping Christmas
By MARTIN CRUTSINGER, AP Economics Writer

WASHINGTON (AP) - Consumers spent and earned more in November, reflecting a rebound from the disruptions caused by Superstorm Sandy.

The Commerce Department says consumer spending rose 0.4 percent compared with October. Personal income jumped 0.6 percent, the biggest gain in 11 months.

Wages and salaries rose $41.1 billion in November. Sandy had reduced wages at an annual rate of $18.2 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, up from 3.4 percent in October.

Economists remain concerned that income growth is too weak to support sustained increases in spending, especially at a time 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.



On Thursday, the government said the economy grew at an annual rate of 3.1 percent in the July-September quarter, more than twice the 1.3 percent growth rate from April through June. Part of the improvement came from a 1.6 percent increase in consumer spending, slightly better than in the spring.

But analysts think economic growth has slowed in the October-December quarter to an annual rate below 2 percent. Uncertainty about whether or how the fiscal cliff will be resolved has led some businesses to delay or reduce hiring and investment in major equipment.

Many economists expect no improvement in the January-March quarter. The latest forecast from a panel of 48 economists with the National Association for Business Economics is that the economy will expand at an annual rate of 1.8 percent in the first quarter of 2013. Growth at that pace is considered too weak to significantly lower the unemployment rate, now at 7.7 percent.

But economists say growth could strengthen in 2013 if Congress and the administration resolve their budget debate in a way that doesn't too drastically raise taxes or cut government spending.

The Federal Reserve ended a policy meeting last week by deciding to extend its current level of $85 billion in monthly bond purchases indefinitely to try to keep long-term interest rates low.

The Fed also for the first time tied any increase in a key short-term interest rate to a substantially improved job market. It said it planned to keep banks' overnight lending rates at a record low near zero until unemployment has fallen below 6.5 percent - as long as the outlook for inflation remains tame.

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14 Comments

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Frankie

Republicans are going to hate this news.

December 24 2012 at 1:25 AM Report abuse +2 rate up rate down Reply
giftsbasketsetc

Food Stamps also up!!!

December 23 2012 at 4:36 PM Report abuse -3 rate up rate down Reply
frisco9312

too bad all the money spent doesn't stay in the usa

December 23 2012 at 1:15 PM Report abuse -1 rate up rate down Reply
susan

I would love to see that is spending up because the people paid cash or by credit card...that answer will just be the topping of the cake as income alone by 1.5%, sure won't buy much.....

December 23 2012 at 4:17 AM Report abuse rate up rate down Reply
Mark

Reminds me of an old song was it 3 Dog Night? Liar Liar Liar

December 23 2012 at 1:01 AM Report abuse -3 rate up rate down Reply
cpo1514

And credit card debt is falling???? NOw thats a real story. Oopps ... sorry... looks like debt is rising.. more defaults.

December 22 2012 at 7:35 AM Report abuse -2 rate up rate down Reply
ectullis

Spending is up because everything costs 25% more. My personal income is down. But I must be the only one in the country.

December 21 2012 at 11:58 PM Report abuse -2 rate up rate down Reply
elendil3136

Personal income is up? Whose? I personally know of no working person who got a raise this year. The only people I know of making more money are bankers, Wall St. scum, and professional athletes. I'd like to see what the results would be if the top 5% of wage earners were taken out of the statistics. I'd bet we'd find that wages were flat for the remaining 95%.

December 21 2012 at 10:18 PM Report abuse +3 rate up rate down Reply
2 replies to elendil3136's comment
vlady1000

Yep. Mine is actually down, due to health care prem (part employees have to pay) has increased.

December 23 2012 at 12:20 AM Report abuse rate up rate down Reply
Mark

Your right the article is full of sh*t you absolutely can't believe anything the Gov or it's lying media scum try to spoon feed us. Not all of us are as dumb as they think we are

December 23 2012 at 12:57 AM Report abuse -3 rate up rate down Reply
papadb24

Yeah Right! Untill the readjust it after the first of the Year.

December 21 2012 at 3:53 PM Report abuse +6 rate up rate down Reply
Sue

intelligent people know it's the holiday season and people spend money on gifts for others and stores hired for the season and once the season is over the numbers will go up again.

December 21 2012 at 3:18 PM Report abuse +6 rate up rate down Reply