US consumer spending dips less than forecast
US consumer spending in November declined less than forecast and, adjusting for inflation, increased for the first time in six months as cheaper gasoline gave Americans more cash to spend for the holidays.
By Bloomberg |
WASHINGTON: US consumer spending in November declined less than forecast and, adjusting for inflation, increased for the first time in six months as cheaper gasoline gave Americans more cash to spend for the holidays. Purchases fell 0.6% in November, while advancing by 0.6% after accounting for inflation, the Commerce Department said on Wednesday in Washington.
Separate figures showing that first-time unemployment benefit claims reached a 26-year high underscored that spending likely weakened in December.
Gasoline prices fell by a total of 50% in October and November, and discounts by retailers from Toys ���R��� Us to Wal-Mart Stores helped prevent a bigger drop in spending last month. Still, Sears Holdings, the largest US department-store company, this month abandoned its earnings forecast for the remainder of the year, and economists anticipate a prolonged drop in spending into 2009.
���The outlook continues to look pretty grim,��� said James O���Sullivan, a senior economist at UBS Securities in Stamford, Connecticut, who correctly forecast the spending figure. Personal consumption ���will still be pretty weak��� next quarter as Americans boost savings, and spending probably won���t stabilise until the middle of next year, he said.
A separate Commerce report showed orders for durable goods in November fell 1%, less than anticipated. Excluding a slump in transportation gear, orders unexpectedly increased.
First-time claims for jobless benefits surged more than forecast last week to 586,000, the Labor Department said, the highest level since November 1982. ���The rate of job losses has sped up to a pace consistent with forecasts for a plunge in GDP during the current quarter,��� Tony Crescenzi, chief bond market strategist at Miller Tabak in New York, said in a note to clients.
Unadjusted for inflation, spending dropped 0.6% last month, a record fifth consecutive decline, the Commerce Department said. The decline reflected a 1.1% plunge in prices that was the biggest since record began in 1992.
Separate figures showing that first-time unemployment benefit claims reached a 26-year high underscored that spending likely weakened in December.
Gasoline prices fell by a total of 50% in October and November, and discounts by retailers from Toys ���R��� Us to Wal-Mart Stores helped prevent a bigger drop in spending last month. Still, Sears Holdings, the largest US department-store company, this month abandoned its earnings forecast for the remainder of the year, and economists anticipate a prolonged drop in spending into 2009.
���The outlook continues to look pretty grim,��� said James O���Sullivan, a senior economist at UBS Securities in Stamford, Connecticut, who correctly forecast the spending figure. Personal consumption ���will still be pretty weak��� next quarter as Americans boost savings, and spending probably won���t stabilise until the middle of next year, he said.
A separate Commerce report showed orders for durable goods in November fell 1%, less than anticipated. Excluding a slump in transportation gear, orders unexpectedly increased.
First-time claims for jobless benefits surged more than forecast last week to 586,000, the Labor Department said, the highest level since November 1982. ���The rate of job losses has sped up to a pace consistent with forecasts for a plunge in GDP during the current quarter,��� Tony Crescenzi, chief bond market strategist at Miller Tabak in New York, said in a note to clients.
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Unadjusted for inflation, spending dropped 0.6% last month, a record fifth consecutive decline, the Commerce Department said. The decline reflected a 1.1% plunge in prices that was the biggest since record began in 1992.
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