Despite a number of lingering concerns over tariffs and jobs, consumer spending continued to be strong in November.
While the top-income earners might account for most of the increase, it pointed to a resilient economy that ended the year on a strong note.
With inflation running around 0.2% to 0.3% on a monthly basis, a 0.6% increase in total retail sales and a 0.4% in the control group on a dollar basis implied growth was strong even when inflation was accounted for.
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The new producer prices data for November was within the target range, with the core metric unchanged on the month, giving consumers another reason to increase their spending.
Looking ahead, we expect another solid month of spending for December with tailwinds from government employees back to work, another stock market rally and solid job numbers.
We believe spending will have more room to run this year as the fiscal stimulus from the tax cuts works into household balance sheets.
Inside the data
Ten out of 13 categories posted increases in November for retail sales. Motor vehicles, the largest category, was up by 1% on the month.
Building materials, gasoline, clothing and sporting goods also showed strong growth.
Spending at restaurants and drinking places increased by 0.6%, while nonstore sales, mostly online, rose by 0.4%.
