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Consumers give boost to US retailers
By Jeannine Aversa |
December 24, 2010, Friday
|
Print Edition
Print Edition
AMERICANS spent at a moderate pace last month, giving the economy a boost ahead of the holidays.
The US Commerce Department yesterday reported consumers increased their spending 0.4 percent in November. The gain came after shoppers boosted spending by 0.7 percent in October, the most since August 2009. It marked the fifth month in a row that spending rose.
Even with the latest increases, consumers are still reluctant to go on the type of buying binges needed to dramatically lower the 9.8 percent unemployment rate.
Consumers' incomes grew 0.3 percent last month, lifted by gains from fatter stock portfolios. Wages and salaries, however, barely budged. Hiring slowed to a crawl in November and paychecks got thinner.
By contrast, incomes gained 0.4 percent in October, reflecting stronger wage gains from a better hiring climate that month.
Income growth is the fuel for future spending.
Looking ahead, economists foresee scant wage gains because the job market is only slowly healing. That's one of the forces that will keep a lid on the type of lavish consumer spending needed to make a big impact on the unemployment rate.
Nonetheless, consumers in the final months of this year have been spending more freely, and that's helping invigorate an economy that has been stuck in a slow-growth rut.
"The spending numbers are good for the economy, no question about it. Consumers are spending at a moderate pace. They are shopping until they are tired. They are not shopping until they drop. But that's okay," said Joel Naroff, president of Naroff Economic Advisors.
Shoppers are spending more as stock portfolios grow, loans become a bit easier to obtain, and massive layoffs have moderated. Discounts have also given shoppers more incentive to spend ahead of the holidays.
A price gauge tied to yesterday's report showed that prices - excluding food and energy - rose just 0.8 percent for the second straight month. That is the smallest gain on records going back to 1960.
Consumer spending accounts for roughly 70 percent of economic activity. A rise in consumer spending is a key reason why analysts believe the economy picked up in the final three months of this year.
Analysts project the economy is growing at an annualized rate of at least 3.5 percent in the October-December quarter, up from a 2.6 percent pace in the July-September period.
For the final three months of this year, analysts predict consumer spending rose at an annual rate of up to 4 percent. Still, consumers would have to double that pace to match the spending rate recorded in the spring of 1983, after the 1981-1982 recession. That pace helped the economy grow at a rate of 9.3 percent and lead the country to a recovery.
The US Commerce Department yesterday reported consumers increased their spending 0.4 percent in November. The gain came after shoppers boosted spending by 0.7 percent in October, the most since August 2009. It marked the fifth month in a row that spending rose.
Even with the latest increases, consumers are still reluctant to go on the type of buying binges needed to dramatically lower the 9.8 percent unemployment rate.
Consumers' incomes grew 0.3 percent last month, lifted by gains from fatter stock portfolios. Wages and salaries, however, barely budged. Hiring slowed to a crawl in November and paychecks got thinner.
By contrast, incomes gained 0.4 percent in October, reflecting stronger wage gains from a better hiring climate that month.
Income growth is the fuel for future spending.
Looking ahead, economists foresee scant wage gains because the job market is only slowly healing. That's one of the forces that will keep a lid on the type of lavish consumer spending needed to make a big impact on the unemployment rate.
Nonetheless, consumers in the final months of this year have been spending more freely, and that's helping invigorate an economy that has been stuck in a slow-growth rut.
"The spending numbers are good for the economy, no question about it. Consumers are spending at a moderate pace. They are shopping until they are tired. They are not shopping until they drop. But that's okay," said Joel Naroff, president of Naroff Economic Advisors.
Shoppers are spending more as stock portfolios grow, loans become a bit easier to obtain, and massive layoffs have moderated. Discounts have also given shoppers more incentive to spend ahead of the holidays.
A price gauge tied to yesterday's report showed that prices - excluding food and energy - rose just 0.8 percent for the second straight month. That is the smallest gain on records going back to 1960.
Consumer spending accounts for roughly 70 percent of economic activity. A rise in consumer spending is a key reason why analysts believe the economy picked up in the final three months of this year.
Analysts project the economy is growing at an annualized rate of at least 3.5 percent in the October-December quarter, up from a 2.6 percent pace in the July-September period.
For the final three months of this year, analysts predict consumer spending rose at an annual rate of up to 4 percent. Still, consumers would have to double that pace to match the spending rate recorded in the spring of 1983, after the 1981-1982 recession. That pace helped the economy grow at a rate of 9.3 percent and lead the country to a recovery.
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