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US consumer spending up 0.5% in November

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by Kay Mitchell

According to the Commerce Department, US consumer spending rose 0.5% in November after a 0.6% rise in October.

The rise in consumer spending, which makes up for more than two-thirds of overall economic activity in the US, was slightly under analysts expectations of 0.7%.

Analysts had expected a higher jump in spending amid the Thanksgiving holiday and the build up to the Christmas period.

Meanwhile, the data also said personal incomes expanded 0.4% in the month compared with 0.3% the previous month, while disposable income remained flat at 0.5%.

The news comes after the Commerce Department revealed a fall in sales of new homes for the month of November.

According to the Commerce Department, new single-family home sales dived by 11.3% to a seasonally adjusted annual rate of 355,000 units, down from a revised 400,000 in the previous month and represented the biggest fall since January.

The US housing market has been showing signs of stability of late, in particular, due to Government incentives including lower mortgage rates and the first-time buyer tax credit.

However, economists attributed the fall to the extension of the tax credit, which had been due to end on November 30.

In related news, earlier this week it was established that the US economy grew at a slower rate in the third quarter than previous estimates showed.

According to the figures, the US economy grew by 2.2% between the July and September period, rather than the 2.8% previously reported and the original estimate of 3.5%.

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News posted: December 24, 2009

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