U.S. Personal Income & Spending (November 2024)
Ksenia Bushmeneva, Economist | 416-308-7392
Date Published: December 20, 2024
- Category:
- U.S.
- Data Commentary
- Consumer
U.S. Personal Income Growth Continues, While Spending Picks Up Pace in November
- Personal income grew 0.3% month-on-month (m/m) in November, a deceleration relative to October's outsized 0.7% gain. Personal income is 5.3% higher than 12 months ago, well above the pace of inflation.
- Accounting for inflation and taxes, real personal disposable income grew 0.2% m/m, slower than the 0.5% pace in the prior month.
- Spending remained robust, increasing 0.4% on the month, and was up 5.5% from a year ago.
- Stripping out inflation, spending volumes grew 0.3% – an acceleration relative to the 0.1% gain recorded in October. Spending on goods picked up steam (+0.7%), led by higher outlays on vehicles and parts and recreational goods, while spending on services was little changed (+0.1%).
- Inflationary pressures eased off in November. The Fed's preferred inflation metric, the core PCE price deflator, rose 0.1% m/m, less than the 0.3% m/m increase seen in October. Year-over-year, core PCE inflation was 2.8% in November, unchanged from the prior month.
- With spending outpacing income growth, the personal savings rate edged lower in November, declining to 4.4% down from 4.5% in October.
Key Implications
- Consumers kept their purse strings open last month, and it seems that many were on the lookout for new car. This could partially reflect the post-hurricane replacement demand. For the fourth quarter a whole, consumer spending looks to increase by 3%, only a small downshift from 3.5% pace seen in Q3. Looking at the year as whole, U.S. consumers are finishing 2024 in strong financial shape thanks to wealth gains in equity markets and continued job gains. As a result, spending growth outpaced income for much of this year (with October being a notable exception).
- Looking ahead to next year, we expect consumer spending to moderate to a trend-like pace of 2% (forecast) as job growth continues to slow, while inflation remains elevated. Strong gains in household wealth represent an upside risk to our outlook as consumers could lean on it next year as job growth moderates.
Disclaimer
This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.