Spending falls in November even as inflation begins to ease: Morning advice

Customer pays for cheese order in grocery store.


Average real spending in the US fell 3.4% month-on-month in November, while real retail sales fell at an annualized rate of 7.8%, Morning Consult said in a report. . report released on Thursday. Downtrend consolidation day seen in Thursday November retail sales data

Morning Consult economic analyst Kayla Bruun wrote: “For most of 2022, consumer spending growth has held up very well, given the extent to which sentiment has plummeted amid persistently high inflation. customary”. “However, trends at the category level suggest that pockets of support may be increasingly scarce.”

The company’s data shows a decline in discretionary services, such as travel, as the summer recovery caused by the pandemic has abated. Spending on durable goods, such as cars, also fell in November after a positive contribution to personal consumption spending in October.

Monthly core inflation fell again in November and the company’s data suggests prices will continue to fall in the near-term. For the second month in a row, core inflation, as measured by core CPI, increased less than expected, up 0.2% in November.

More inflation data will be released next week along with November personal consumption spending data, which the Federal Reserve tracks closely as a gauge of inflation. Core PCE, the Fed’s preferred gauge, is expected to grow 0.3% month-on-month, well above the 0.2% gain in October.

The company said Morning Consult’s five supply chain indicators of consumer inflation pressures have shown a strong leading relationship with core inflation year-to-date. Based on that history, the Index’s implied forecast for December shows downside inflation risks, Bruun said.

Lower consumer spending will help the Fed’s efforts to contain inflation. The U.S. central bank has aggressively raised interest rates, making borrowing more expensive, and in the process, demand will move closer to equilibrating with limited supply. Fed officials need more evidence that inflation is making significant progress toward the 2% target before they start thinking about cutting rates. Fed Chairman Powell said Wednesday.


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