Consumer, Business Spending Probably Increased as U.S. Economy Accelerates

Spending by U.S. consumers and businesses probably accelerated in November, a signal the world’s largest economy is speeding up at the end of the year, economists said before today’s reports.

Household purchases rose 0.5 percent after a 0.4 percent increase in October, according to the median estimate of 75 economists surveyed by Bloomberg News. Demand for durable goods excluding cars and aircraft may have climbed 1.8 percent.

Fewer firings and rising incomes are boosting consumer confidence, making it more likely spending, which accounts for about 70 percent of the economy, will keep improving. At the same time, factories are ramping up production as gains in exports reinforce growing demand from U.S. companies, pointing to a more balanced and durable recovery.

“The economy is still expanding,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. “We’ve seen pretty good trends in consumer spending and business fixed investment for the last couple of quarters.”

The Commerce Department is scheduled to release the consumer spending and durable goods reports at 8:30 a.m. in Washington. Estimates for consumer outlays ranged from increases of 0.1 percent to 0.8 percent in the Bloomberg survey.

The report may also show personal income rose 0.2 percent, according to survey median.

Demand for total durable goods fell 0.5 percent, while bookings for non-defense capital goods excluding aircraft and parts, a signal of business investment, increased 3.1 percent, according to the poll.

Christmas Shopping

Improving household balance sheets may be helping boost demand during the Christmas holiday period. The International Council of Shopping Centers on Dec. 14 revised its November- December holiday-season sales forecast up by 0.5 percentage point to a range of 3.5 percent to 4 percent.

“We’re clearly seeing an improved environment, especially as the markets have held strong,” Stephen Sadove, chief executive officer of Saks Inc., said in a Dec. 20 interview on Bloomberg Television.

Auto dealers also are among retailers seeing improved demand. Car sales in November rose to a 12.26 million unit pace, the highest since the government’s cash-for-clunkers program in August 2009, industry data showed this month. Demand over the past three months is the strongest in two years.

Shares Rising

The improving economy has boosted stock prices. The Standard & Poor’s 500 Index has risen 23 percent since reaching a 10-month low on July 2. It is up 6.6 percent so far this month.

Even so, growth has not been fast enough to bring down the unemployment rate, which rose to 9.8 percent in November. Federal Reserve policy makers last week maintained the central bank’s program to buy up to an additional $600 billion in Treasury securities through June to try to bolster the economy and support prices.

The economy grew at a 2.6 percent annual pace in the third quarter, less than forecast, the government reported yesterday. Consumer spending rose at a 2.4 percent pace, the fastest since the first three months of 2007, while less than the 2.8 percent estimated last month. The revision in purchases reflected less spending on health-care and financial services.

Some measures of the labor market have been improving. Weekly claims for jobless benefits averaged 423,000 in the month ended Dec. 11, the lowest level in two years. The Labor Department is scheduled to report today that applications in the period ended Dec. 18 held at 420,000 last week, according to the survey median.

Other reports will show sales of new houses last month rose 6 percent from October to a 300,000 annual pace, and the Thomson Reuters/University of Michigan index of consumer sentiment climbed in December to a six-month high of 74.5.

                        Bloomberg Survey

==============================================================
                          Durables Durables     Pers     Pers
                            Orders Ex-Trans      Inc    Spend
                              MOM%     MOM%     MOM%     MOM%
==============================================================

Date of Release              12/23    12/23    12/23    12/23
Observation Period            Nov.     Nov.     Nov.     Nov.
--------------------------------------------------------------
Median                       -0.5%     1.8%     0.2%     0.5%
Average                      -0.5%     1.7%     0.2%     0.5%
High Forecast                 3.0%     3.0%     0.4%     0.8%
Low Forecast                 -3.6%    -0.4%     0.0%     0.1%
Number of Participants          74       48       71       75
Previous                     -3.4%    -2.7%     0.5%     0.4%
----------------------------------------------------------------
4CAST Ltd.                   -1.4%     2.0%     0.2%     0.5%
ABN Amro Inc.                -0.3%     ---      ---      0.4%
Action Economics              1.0%     2.5%     0.3%     0.5%
Aletti Gestielle SGR         -1.8%     ---      0.0%     0.4%
Ameriprise Financial          0.8%     1.6%     0.3%     0.5%
Banesto                      -0.7%     ---      0.3%     0.4%
Bank of Tokyo- Mitsubishi    -0.8%     ---      0.2%     0.7%
Bantleon Bank AG             -0.8%     2.0%     0.2%     0.6%
Barclays Capital              0.0%     ---      0.2%     0.5%
Bayerische Landesbank         0.0%     2.5%     0.3%     0.5%
BBVA                         -0.3%     1.8%     0.3%     0.4%
BMO Capital Markets          -1.0%     2.0%     0.3%     0.6%
BNP Paribas                  -0.5%     ---      0.2%     0.5%
BofA Merrill Lynch Research  -0.5%     1.5%     0.1%     0.5%
Briefing.com                 -1.8%     0.7%     0.1%     0.5%
Capital Economics            -0.7%     2.5%     0.2%     0.5%
CIBC World Markets           -1.1%     1.0%     0.3%     0.5%
Citi                         -2.2%     1.8%     0.2%     0.5%
Commerzbank AG                0.0%     2.5%     0.3%     0.5%
Credit Agricole CIB          -0.1%     2.0%     0.2%     0.5%
Credit Suisse                -1.0%     3.0%     0.3%     0.4%
Daiwa Securities America     -1.5%     ---      0.2%     0.4%
Danske Bank                   3.0%     ---      0.3%     0.7%
DekaBank                     -1.0%     2.5%     0.3%     0.6%
Desjardins Group             -0.7%     ---      0.4%     0.4%
Deutsche Bank Securities      1.0%     2.0%     0.3%     0.5%
Deutsche Postbank AG          0.2%     2.2%     ---      0.6%
Exane                         0.5%     2.0%     ---      0.5%
First Trust Advisors         -0.9%     2.3%     0.3%     0.8%
FTN Financial                -0.2%     1.3%     0.0%     0.3%
Goldman, Sachs & Co.         -1.0%     ---      0.2%     0.4%
Helaba                       -1.0%     ---      0.2%     0.7%
High Frequency Economics      0.0%     3.0%     0.3%     0.4%
Horizon Investments           0.3%     1.1%     0.2%     0.2%
HSBC Markets                 -1.2%     1.3%     0.2%     0.4%
Hugh Johnson Advisors         2.0%     ---      0.3%     0.7%
Ibersecurities                1.0%     ---      0.3%     0.7%
IDEAglobal                   -0.8%     1.0%     0.4%     0.4%
IHS Global Insight           -0.8%     ---      0.4%     0.5%
Informa Global Markets       -1.0%     ---      0.2%     0.4%
ING Financial Markets         0.0%     2.3%     0.4%     0.5%
Insight Economics            -1.0%     ---      0.2%     0.5%
Intesa-SanPaulo              -0.5%     1.6%     0.2%     0.5%
J.P. Morgan Chase            -0.5%     1.7%     0.2%     0.6%
Janney Montgomery Scott       0.5%     1.2%     0.1%     0.5%
Jefferies & Co.               0.0%     1.4%     0.2%     0.4%
Landesbank Berlin            -3.5%    -0.4%     0.1%     0.7%
Landesbank BW                 0.5%     ---      0.1%     0.5%
Maria Fiorini Ramirez         ---      ---      0.3%     0.5%
MF Global                    -1.8%     2.0%     0.3%     0.5%
Moody’s Analytics             0.8%     2.9%     0.1%     0.5%
Morgan Keegan & Co.          -2.2%     ---      0.3%     0.4%
Morgan Stanley & Co.         -0.6%     ---      0.2%     0.5%
Natixis                       0.8%     0.5%     0.4%     0.5%
Nomura Securities Intl.       1.2%     0.8%     0.1%     0.4%
Nord/LB                      -1.5%     1.5%     0.3%     0.4%
Pierian Capital              -0.3%     0.6%     ---      ---
Pierpont Securities LLC      -1.8%     ---      0.2%     0.5%
PineBridge Investments       -0.3%     0.9%     0.3%     0.5%
PNC Bank                      2.0%     ---      0.2%     0.5%
Raiffeisenbank International -2.0%     0.0%     0.2%     0.3%
Raymond James                 0.7%     0.6%     0.3%     0.5%
RBC Capital Markets          -1.3%     2.7%     0.1%     0.5%
Scotia Capital               -0.7%     1.2%     0.3%     0.5%
Societe Generale             -3.6%     2.0%     0.2%     0.4%
Standard Chartered           -0.3%     1.5%     0.2%     0.2%
State Street Global Markets  -1.2%     2.0%     0.2%     0.5%
Stone & McCarthy Research    -1.5%     ---      0.1%     0.1%
TD Securities                 ---      ---      0.3%     0.4%
Thomson Reuters/IFR          -2.7%     1.4%     0.2%     0.4%
UBS                           0.0%     2.0%     0.2%     0.3%
University of Maryland        0.8%     ---      0.3%     0.5%
Wells Fargo & Co.             1.9%     2.0%     0.2%     0.4%
WestLB AG                     1.0%     ---      0.4%     0.3%
Westpac Banking Co.          -1.5%     ---      0.2%     0.8%
Wrightson ICAP               -0.5%     ---      ---      0.4%
==============================================================

To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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