More good news for the economy. Consumer spending rose again in November, pointing to a strengthening economy as 2013 comes to an end. The Commerce Department said consumer spending rose 0.5% in November, up from 0.4% in October. Spending has increased for seven straight months.
The rise in consumer spending is being helped by the rising stock market and home prices. People have more equity in their names than they did earlier in the economic recovery.
Monday’s economic data continues to support the growing economy. Economists are hopeful the economy can maintain the impressive growth from the third quarter in to this quarter. The latest GDP revision showed the economy grew at a shocking 4.1% rate in the third quarter. A spike in consumer spending helped send the latest GDP numbers higher. Still, business inventories made up a huge part of third quarter GDP. If consumer spending were to falter in the fourth quarter, the massive build-up in business inventories will have a negative effect on fourth quarter GDP.
Today’s numbers also support the Fed’s view of the economy. Last Wednesday, the central bank felt confident enough about the economy to cut QE by $10 billion. There are a couple of obstacles to more QE tapering. An economic slowdown would give the Fed pause about continuing to taper. Washington could also throw a wrench in things. Lawmakers were able to get a budget deal done without too much bickering. Will the same happen for the debt ceiling?
In other consumer data news, consumer sentiment rose in December. According to the Thomson Reuters/University of Michigan’s index, consumer sentiment rose to 82.5 in December, up from 75.1 in November.
U.S. stocks are responding positively to today’s batch of consumer data. The Dow is up 71 points and is nearing 16,300. The Nasdaq is up 31 points and the S&P 500 is up 8 points.
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