Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
  Personal Income Up 0.6% in November, Personal Consumption Up 0.4%
Posted Under: Data Watch • PIC

Implications: After getting clobbered by Sandy in October, income and consumer spending rebounded sharply in November. Incomes increased 0.6% for November (+0.7% including upward revisions for prior months). The gains in the months ahead are not likely to be quite so strong but should continue. In the past year, incomes are up 4.1% and private-sector wages & salaries are up 4.3%. In other words, income gains are not artificially supported by government transfer payments. Led by durable goods like autos, consumer spending was up 0.4% in November (+0.5% including revisions to prior months) and is up 3.5% in the past year. "Real" (inflation-adjusted) spending was up 0.6% in November (+0.8% including revisions to prior months) and up 2.1% versus a year ago. One of the reasons real spending was so strong was that, consistent with the drop in the CPI for November, overall personal consumption inflation was negative as well, with prices falling 0.2%. This measure of inflation, known as the PCE deflator, is the Federal Reserve's favorite measure of overall prices and is up only 1.4% versus a year ago, which is less than the Fed's target of 2%. However, given the loose stance of monetary policy, look for inflation to move above the Fed's target in 2013. Before today's economic reports, we had been estimating a real GDP growth rate of only 0.5% for the fourth quarter; today's data now have us tracking 1%. If we get a last minute political deal on the "fiscal cliff," we expect real GDP growth in the 2.5% to 3% range next year. That includes boosts from farm inventory replenishment after this year's drought, as well as Sandy-related rebuilding on the East Coast. However, if we fall over the cliff for a prolonged period and there is no deal at all, growth in 2013 is likely to be roughly half that pace with more weakness in the first half of the year.

Click here for a PDF version
Posted on Friday, December 21, 2012 @ 10:27 AM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L. P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
New Orders for Durable Goods were Up 0.7% in November, Up 1.4% Including Revisions to October
The Bond Market Says the Mayans Were Wrong
Real GDP Growth in Q3 was Revised Up to a 3.1% Annual Rate vs. a Prior Estimate of 2.7%
Existing Home Sales Rose 5.9% in November to an Annual Rate of 5.04 Million Units
Housing Starts Declined 3.0% in November to 861,000 Units at an Annual Rate
Bloomberg Radio Interview: First Trust’s Wesbury Says Investors Are 'Too Gloomy’
Fed Talks Louder, To Little Avail
November's Industrial Production and our view on the Fiscal Cliff
The Consumer Price Index (CPI) declined 0.3% in November
It’s Time for the Fed to Just Go Away: Wesbury
Skip Navigation Links.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
Home |  Important Legal Information |  Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2017 All rights reserved.