U.S. consumer spending rises more than expected; savings
lowest since 2008
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 [December 22, 2017]
WASHINGTON, Dec 22 (Reuters) - U.S.
consumer spending accelerated in November amid an increase in demand for
recreational goods and utilities, but the strong pace of consumption is
unlikely to be sustained as savings dropped to their lowest level in
more than nine years.
The Commerce Department said on Friday consumer spending, which accounts
for more than two-thirds of U.S. economic activity, rose 0.6 percent
last month after a downwardly revised 0.2 percent increase in October.
Economists polled by Reuters had forecast consumer spending increasing
0.5 percent in November after a previously reported 0.3 percent rise in
October. Spending on nondurable goods surged 1.2 percent and outlays on
services rose 0.6 percent. Spending on long-lasting goods was unchanged.
When adjusted for inflation, consumer spending increased 0.4 percent in
November after being unchanged the prior month.
The report added to bullish data on the labor market, manufacturing and
housing in painting a strong picture of the economy as the year winds
down.
The government reported on Thursday that the economy grew at a 3.2
percent annualized rate in the third quarter. Growth estimates for the
October-December quarter are currently as high as a 3.3 percent pace.
Consumer spending could get a lift from sweeping individual income tax
cuts approved by the U.S. Congress this week. The income tax cuts are,
however, skewed toward higher-income households, which economists say
have a low propensity to consume.
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A woman shops inside a
store at Roosevelt Field shopping mall in Garden City, New York,
U.S., November 24, 2017. REUTERS/Shannon Stapleton
Monthly inflation remained benign in November. The Federal Reserve's preferred
inflation measure, the personal consumption expenditures (PCE) price index
excluding food and energy, rose 0.1 percent in November after gaining 0.2
percent in October. The so-called core PCE increased 1.5 percent in the 12
months through November, picking up from 1.4 percent in October.
The core PCE has undershot the Fed's 2 percent target since mid-2012. Inflation
could determine the pace at which the Fed raises interest rates next year. The
U.S. central bank increased borrowing costs three time this year and has
forecast three rate hikes in 2018.
Personal income rose 0.3 percent last month after advancing 0.4 percent in
October. Wages increased 0.4 percent last month.
With spending outpacing income, savings fell to $426.2 billion in November, the
lowest level since August 2008, from $466.9 billion in the prior month. The
saving rate dropped to 2.9 percent, the lowest since November 2007, from 3.2
percent in October.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci) ((Lucia.Mutikani@thomsonreuters.com;
1 202 898 8315; Reuters Messaging: lucia.mutikani.thomsonreuters.
com@reuters.net)
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