Personal income and expenditure in the U.S. rose for the fifth month during November, according to a report by the U.S. Commerce Department, indicating that the average consumer is growing more confident about the economic recovery and their financial situation.
Personal income rose 0.3 percent to $42.3 billion, while personal consumption expenditures (PCE) rose 0.4 percent to $43.3 billion.
While this was slightly lower than the rise in October, economists are reassured by the continued spending by consumers.
Black Friday, the day after Thanksgiving, is considered one of the biggest shopping days in the U.S. as more stores offer massive sales and the holiday shopping season begins on this day.
Purchase of durable goods rose 0.2 percent during the month, while motor vehicles and parts dropped after seeing a rise in October.
Consumer spending will continue to grow but the pace may slow, Mark Vitner, an economist at Wells Fargo Capital, said in a note.
A lasting turnaround in personal income, however, will not likely come until the economy begins to add jobs in earnest, he added, stating that he expects job growth in the order of 150,000 in the first quarter of 2011.
Unemployment rates in the U.S. have remained high at 9.8 percent, while more people continue to enter the job market. For unemployment rate to really decrease, at least 200,000 jobs need to be created every month, according to experts. Currently, the private sector added around 93,000 jobs in November, while the non-farm payroll employment added only 39,000 jobs.
Personal savings dipped during the month to $614.8 billion from $622.8 billion in October.
The three-month annualized growth rate rose to a robust 3.8 percent, Paul Ashworth, an economist at Capital Economics, said, adding that he expects the annualized gain for the fourth quarter to be very close to that.
“Whether this stronger consumption growth is sustainable, however, is still open to question,” he added.
Households managed to pull off the savings by running down their saving rate to 5.3 percent of disposable income in November, from a recent peak of 6.3 percent in June, Ashworth said.
The PCE price index, the preferred measure of consumer inflation of the U.S. Federal Reserve, rose 0.1 percent after remaining flat for the past four months.
Meanwhile, disposable personal income (DPI) rose 0.3 percent to $37.8 billion in November.