U.S. Consumer Spending Growth Slowed in November as Wages Fell

Consumers Share the Market’s Sense of Optimism

Consumer spending in the U.S. rose less than forecast in November as after-tax incomes adjusted for inflation declined for the first time since October 2013.

Purchases increased 0.2 percent after rising a revised 0.4 percent in October, Commerce Department figures showed Thursday. The median forecast in a Bloomberg survey called for a 0.3 percent advance. Real disposable income, or the money remaining after taxes, decreased 0.1 percent, reflecting a decrease in wages.

The report corroborates lackluster retail-sales data earlier this month, indicating household consumption is probably cooling in the fourth quarter. The report also showed nominal income was little changed after accelerating in October.

“Income has been restrained by still subdued wages ,” said David Sloan, a senior economist at 4CAST-RGE in New York. “We were expecting a weak result because payroll earnings and retail sales were both quite subdued.”

Wages decreased 0.1 percent in November after a 0.5 percent increase the prior month.

After adjusting for inflation, in order to generate the figures used to calculate gross domestic product, purchases increased 0.1 percent for a second month.

Household outlays on services increased 0.2 percent after adjusting for inflation. The services category, which also includes tourism, legal help, health care, and personal care items such as haircuts, is typically difficult for the government to estimate accurately until more information is available in later months.

The personal spending report showed the price index tied to consumer purchases was unchanged in November from the prior month. It rose 1.4 percent from the same time in 2015. This inflation gauge is preferred by Federal Reserve policy makers and, while making progress, hasn’t met their 2 percent goal since April 2012.

Fed officials nonetheless raised the benchmark interest rate earlier this month for the first time in 2016, on labor-market strength and confidence that inflation is picking up.

Stripping out the volatile food and energy categories, the price measure was unchanged from October and up 1.6 percent in the 12 months ended in November.

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