Washington, DC, United States (4E) – U.S. consumers increased their spending in November despite slow income growth, the latest signal that the economic recovery is gaining foothold.
Purchases rose 0.5 percent in November after gaining 0.4 percent in October that was higher than initially estimated, according to the Commerce Department report released in Washington. The increase was boosted by higher spending on big-ticket items, more than half of those purchases are for automobiles and parts, as well as for services.
Consumer sentiment also climbed in December to a five-month high according to separate data. The final index of consumer sentiment by Thomson Reuters/University of Michigan rose to 82.5 in December from 75.1 in November, matching an earlier estimate announced this month.
Consumer spending is a major driver of U.S. economic growth, contributing two-thirds of economic demand. However, weak income growth could limit gains in the coming months. Personal income gained 0.2 percent in November after declining 0.1 percent in October, prompting consumers to dip into their savings to keep their spending.
The consumer spending data follows report last week that showed improving economic growth as household spending picked up. The economy’s gross domestic product jumped 4.1 percent in the third quarter, the most in nearly two years, according to last week’s Commerce Department data.