The American consumer has held up remarkably well during the recent surge in inflation. But that was not the case in November as the pace of spending moderated to an 0.3% increase, which is likely because of an adjustment to rising prices, according to government data released Wednesday.
The October top-line estimate was revised up to a 1.8% gain, implying that consumers, who expected shortages of goods around the holidays—an idea that is not true—pulled some of the traditional holiday spending into the fall.
To be sure, the idea that e-commerce sales were flat on the month is somewhat questionable and will almost certainly be revised up in the coming months, which will make the data look a bit stronger.
Beneath the headline number, the core figure, which excludes autos, advanced by 0.3% and the control group, which feeds into the estimate of gross domestic product, declined by 0.1% on the month. Excluding autos and gasoline, spending increased by 0.2% on the month. Excluding autos and building materials, it rose by 0.3%.
Because of noise in the collection of data for retail sales, which accounts for roughly 23% of total U.S. household spending, we prefer to look at the three-month average annualized pace of sales to ascertain the true trend in consumption.
That figure implies a 9.3% annualized pace halfway through the current quarter, which supports our current forecast of a 7.2% expansion of gross domestic product in the current quarter with risk of a strong print when it is published in early 2022. The control group is up by 10.5% using that same metric.
The components of the report reflected a slowing of spending across the economy during the month as outlays on motor vehicles and parts declined by 0.1%, and were flat on furniture and on the proxy for e-commerce.
Spending on electronics declined by 4.6%, health and personal care dropped by 0.6%, general merchandise by 1.2% and department stores by 5.4%. Spending on clothing increased by 0.5%, and sporting goods by 1.3%. Spending at gasoline stations rose by 1.7% and at eating and drinking establishments by 1%.
