US Consumers Opened Their Wallets in November

US Consumers Opened Their Wallets in November

US consumer spending gathered momentum in November as households bought furniture, electronics and a range of other goods, which could further allay fears of a significant slowdown in the economy.

The upbeat data from the Commerce Department on Friday bolstered expectations that the Fed will raise interest rates at its 18-19 December policy meeting, despite moderating inflation and tighter financial market conditions.

The Fed hiked fed fund rates 3X this year.

Retail sales excluding automobiles, gasoline, building materials and food services surged 0.9% last month after an upwardly revised 0.7% increase in October.

These core retail sales, which correspond most closely with the consumer spending component of GDP (gross domestic product), were previously reported to have gained 0.3% in October. Economists polled by Reuters had forecast core retail sales rising 0.4% last month.

November’s increase in core retail sales and upward revisions to October’s data suggested a brisk pace of consumer spending in Q-4. Consumer spending, which accounts for about 70% of the US economy, increased at a 3.6% annualized rate in the July-September frame.

But worries over the economy’s health were eased Thursday after government data showed the number of Americans seeking unemployment benefits fell back to a near 49-year low last week.

GDP estimates for Q-4 are around a 2.4%  rate. The economy grew a 3.5% pace in the July-September frame. Spending is being boosted by a tightening labor market, which is starting to spur faster wage growth, lower taxes and moderate inflation.

The USD rose against EUR and JPY after the core retail sales data, while US Treasury prices trimmed overnight gains.

US stock index traded sharply lower on the day.

Overall retail sales, however, rose only 0.2% in November as cheaper gasoline undercut sales at service stations. Gasoline prices have dropped about 40c/gal since October, according to the US Energy Information Administration.

Crude Oil prices have fallen by 33% since the start of October amid concerns about oversupply and a slowing global economy.

Retail sales increased by an upwardly revised 1.1% in October. They were previously reported to have surged 0.8%.

Receipts at clothing stores dropped 0.2%  after jumping 1.3% in October. The drop in clothing sales probably reflects deep discounting by retailers seeking to lure shoppers.

Online and mail-order retail sales surged 2.3%, the largest gain in a year, after increasing 0.8% in October.

Sales at restaurants and bars fell 0.5% after rising 0.6% in October.

Have a terrific weekend

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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