WASHINGTON — The U.S. November personal income report implies the consumer is propelling the economy higher in Q4. December sales, of course, will determine the exact amount of strength, but the latest data show spending was rising into the end of the year.
November personal income was up 0.2%, personal consumption expenditures grew 0.5% (its best gain since June), and core PCE prices rose 0.1% for a 1.1% gain over the year.
Real PCE posted a 0.5% gain after a 0.4% increase in October, two very good gains. September and October real spending levels were revised higher, giving a 3.6% rise in SAAR consumption for Q4 so far. The data suggest Q4 is taking off.
November real durables spending posted a 2.2% increase, leading the way for the month's expenditures. December auto sales also appear strong.
The November income gain came after a 0.1% dip in October and was a rebound. It was led by a $26.1 billion advance in private wages after a $9.9 billion rise in October. Both goods and services payrolls advanced smartly.
Most other income was up: rents, receipts on assets, and transfers all gained. Farm proprietors' income, though, fell $5 billion in an exception as subsidies expired.
Savings decreased to $525.4 billion and the savings rate was 4.2%, its lowest since February in the aftermath of tax rates being hiked.
Even if December sales come in flat to a little higher, Q4 real spending will average out to produce a substantial gain in consumption. As a result, some GDP estimates could be upped.
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