Growth slow for consumer spending in November

Associated Press

WASHINGTON

Consumers slowed the growth in their spending in November and income growth was flat, two worrisome signs at the start of the holiday-shopping season.

Consumer spending rose 0.2 percent in November, the weakest showing since a 0.1 percent rise in August, the Commerce Department reported Thursday. Spending had posted healthy gains of 0.7 percent in September and 0.4 percent in October.

Incomes were unchanged in November after gains of 0.5 percent in October and 0.4 percent in September.

So far, spending in the holiday-shopping season has not been as strong as last year. That has prompted some stores to offer better deals and incentives such as free shipping.

Retailers have pared down their inventories and offered more exclusive merchandise in a bid to avoid having to offer bigger discounts in coming weeks. But so far, shoppers have shown a willingness to wait. That means stores are once again counting on last-minute buyers for the final stretch of holiday shopping.

Paul Ashworth, chief U.S. economist at Capital Economics, said based on the new report, consumer spending is on track to grow at an annual rate of 2.3 percent in the fourth quarter, a slowdown from 3 percent growth in the third quarter.

Consumer spending represents 70 percent of total economic activity.

A separate report Thursday showed that the economy grew 3.5 percent in the third quarter. However, economists believe growth will ease to around 1.5 percent in the fourth quarter.

Even with the slowdown, economists are hopeful that consumers will keep spending in 2017.