U.S. consumer spending remained surprisingly robust in November,defying expectations of a slowdown as the Federal Reserve battles inflation.New data released today by the Commerce Department shows the Personal Consumption Expenditures (PCE) price index – a key measure of inflation – edged up 2.8% year-over-year,a slight acceleration from October.The figures, delayed from release due to last fall’s government shutdown, offer a mixed signal for the central bank as it weighs future interest rate policy.
米ワシントンのスーパーマーケットで２０２２年８月撮影。REUTERS/Sarah Silbiger/File Photo
WASHINGTON, November 22 – U.S. consumer spending continued to demonstrate resilience in November, with the Personal Consumption Expenditures (PCE) price index rising 2.8% year-over-year, according to data released by the Commerce Department today. This represents a slight acceleration from the 2.7% increase recorded in October.
On a monthly basis, the PCE price index increased 0.2%, matching the pace of the previous month. The PCE is a key inflation gauge closely watched by the Federal Reserve.
The core PCE price index, which excludes volatile food and energy costs, also rose 2.8% year-over-year and increased 0.2% month-over-month, mirroring October’s figures. This metric is considered an even more reliable indicator of underlying inflation trends.
Personal consumption expenditures increased 0.5% in November, consistent with October’s growth and in line with market expectations. The sustained strength in consumer spending suggests the U.S. economy may be on track for a third consecutive quarter of robust growth. Real personal consumption expenditures, adjusted for inflation, rose 0.3%, the same rate as the prior month.
The release of the October and November personal income and outlays data was delayed due to a partial government shutdown last fall.
November’s spending was driven by increases in healthcare, financial services and insurance, as well as housing and utilities. Service spending increased 0.4%, boosted by spending on accommodation and food services, including hotels and restaurants. This sector had risen 0.6% in October.
Spending on goods increased 0.7%, a significant acceleration from the 0.3% increase seen in October. This was fueled by increased purchases of automobiles, clothing, footwear, furniture, and recreational goods. Energy product spending also saw a substantial increase, reflecting higher prices, particularly for gasoline.
Meanwhile, the personal saving rate declined to 3.5%, down from 3.7% in October and reaching its lowest level in three years, indicating consumers are drawing down on savings.
Personal income increased 0.3%, accelerating from the 0.1% increase in October. However, wage growth slowed to a 0.4% increase, compared to 0.3% the previous month.
Economists suggest the strong consumer spending and a stable labor market may reduce the urgency for the Federal Reserve to implement interest rate cuts at its upcoming Federal Open Market Committee (FOMC) meeting scheduled for November 27-28. However, Lydia Bousour, Senior Economist at EY Parthenon, cautioned that “personal consumption is surprisingly resilient, but this strength masks a more concerning reality.” She added, “Beneath the surface, many households are grappling with depleted savings, diminishing job opportunities, and slowing income growth, which is eroding purchasing power.”
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