- Personal Spending for November rose .3% versus estimates of a .4% increase and a .2% gain in October.
- The PCE Core for November rose .1% versus estimates of a .2% increase and a .1% gain in October.
- Leading Indicators for November rose .5% versus estimates of a .5% increase and an upwardly revised 1.0% gain in October.
BOTTOM LINE: US consumer spending rose in November as auto sales recovered from a 7-year low and prices increased less than expected, Bloomberg reported. Rising incomes, increasing home values, rising stocks prices and falling gas prices are helping to boost consumer spending. The year-over-year gain in the PCE Core, the Fed’s favorite inflation gauge, of 1.8% is the smallest since March 2004. Income and spending growth should decelerate modestly in 2006, along with the PCE Core. This should help keep long-term interest rates near historically low levels.
The number of Americans filing first-time claims for unemployment benefits fell 13,000 last week, suggesting companies are keeping workers and hiring new ones to meet demand, Bloomberg said. The four-week moving average decreased to 324,500 from 329,250 the prior week. The unemployment rate for those eligible for claims, which follow the US unemployment rate, rose to 2.1% from 2.0% the prior week. I continue to believe the labor market will remain healthy over the intermediate-term without generating substantial inflation pressures.
The US index of leading economic indicators rose in November for a second month as the labor market improved and consumers became more optimistic, Bloomberg said. Leading Indicators are still pointing to healthy economic growth.