The Bureau of Economic Analysis said that personal spending was up strongly in November, up 0.6 percent. After increasing by just 0.2 percent in October, Americans accelerated their personal consumption expenditures in November, including a rebound in nondurable goods spending, up 1.2 percent. Durable goods spending was unchanged in the latest data. Overall, consumer spending has been one of the bright spots in the U.S. economy, with the public more willing to open their pocketbooks over the course of this year. Indeed, personal spending has increased 4.5 percent over the past 12 months, up from 4.2 percent in the previous release and the best year-over-year rate since April. In addition, goods spending for durable and nondurable goods were up 5.4 percent and 5.0 percent year-over-year, respectively.
Likewise, the savings rate has fallen to a 10-year low, down from 3.2 percent in October to 2.9 percent in November. This was a level not seen in the data since November 2007. It is yet another illustration that Americans have accelerated their purchasing—something that is likely to help boost overall holiday spending this year.
Meanwhile, personal incomes continued to rise modestly, up 0.3 percent in November but easing from a 0.4 percent gain in October. Over the past 12 months, personal incomes have risen 3.8 percent in November, up from 3.4 percent year-over-year in October. In addition, manufacturing wages and salaries edged higher for the month, up from $840.1 billion in October to $841.1 billion in November. That translated into a 4.3 percent increase in manufacturing wages and salaries over the past 12 months, up from $806.6 billion in November 2016.
In other news, the personal consumption expenditure (PCE) deflator increased by 0.2 percent in November. The increase stemmed in large part from an acceleration in energy costs, up 4.3 percent, which have been highly volatile in recent months, mostly from hurricane-related pullbacks in activity and supply issues. In contrast, food prices edged down 0.1 percent in November. Core inflation, which excludes food and energy, inched up by 0.1 percent in November.
Overall, pricing pressures have drifted slightly higher over the past couple months but remain quite modest and largely under control, at least for now. After seeing pricing pressures accelerate strongly earlier this year—with the PCE deflator peaking at 2.2 percent year-over-year in February—inflation has pulled back since then. Since November 2016, the PCE deflator has increased 1.8 percent, up from 1.6 percent in October. Core PCE inflation was up 1.5 percent year-over-year in November—well below the Fed’s goal of 2 percent.