Personal income for Americans increased by 0.5 percent in November, according to the U.S. Department of Commerce. That was better than expected and the October gain was revised higher. Consumer spending, which accounts for the bulk of the U.S. economy, also rose last month (+0.4 percent) and generally bodes well for fourth quarter gross domestic product. The sustainability of personal consumption growth in America will continue to depend in large part on the labor market and consumer confidence.
The former remains about as strong as one would hope for at this stage in the economic cycle, while the latter has rebounded recently. In fact, the University of Michigan’s popular sentiment index rose from 96.8 in November to 99.3 in December, the largest increase since September and the highest headline print since May. Under the hood, surveyed consumers’ opinions of current economic conditions firmed to the best level in a year, and outlooks on the future also improved. Record high stock prices and a decline in policy uncertainty have likely contributed to the recent gains in consumer optimism, and the report’s authors added that “the impeachment hearing had a barely noticeable impact on economic expectations, as it was mentioned by just 2% of all consumers in the December survey.”
Sources: Econoday, U.S. DoC, UoM, FRBSL