This Economic Expansion Looks Sturdier Than the Consensus
The consensus estimate that we’ll have a two-percent growth economy in the coming year is looking increasingly out-of-touch with reality.
Personal spending rose at a solid pace in November, with U.S. consumers seeing rising incomes, mild inflation, and steady employment—and demonstrating remarkable confidence by drawing down savings to maintain robust consumption levels.
Consumer spending, adjusted for inflation, increased 0.3 percent for a second month, the Bureau of Economic Analysis (BEA) said Thursday. The agency released both October and November figures after a lengthy delay caused by the federal government shutdown.
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The report shows American consumers spending with confidence despite persistent complaints of elevated prices, supported by wage growth and payroll expansion that continues to outpace what’s needed to maintain labor market stability. Real consumption growth of 0.3 percent in both months represents genuine increases in the volume of goods and services purchased, powering economic expansion in the fourth quarter.
Personal spending was led by the strongest advance in outlays for goods since July, including motor vehicles, gasoline and energy goods, and apparel. Services spending remained robust, led by health care, financial services, and other services. Spending on discretionary categories like recreation services, recreational goods, and dining grew robustly, reinforcing the message that consumers feel secure enough to spend on leisure.