Consumer Spending in U.S. Probably Rose in November on Autos
December 23, 2011, 8:33 AM ESTBy Bob Willis
Dec. 23 (Bloomberg) -- Consumer spending probably climbed in November as Americans flocked to auto showrooms and shopped for holiday bargains, contributing to a pickup in U.S. growth as 2011 comes to a close, economists said before a report today.
Purchases rose 0.3 percent after increasing 0.1 percent in October, according to the median estimate of 79 economists surveyed by Bloomberg News. The report may also show incomes grew 0.2 percent, down from a 0.4 percent gain the prior month.
“We’ve got a lot of pent-up demand coming through on car sales,” said Nigel Gault, chief U.S. economist at IHS Global Insight Inc. in Lexington, Massachusetts. “Overall, we are probably going to come in with holiday spending up not quite as much as last year.”
Best Buy Co. and Target Corp. are among retailers using discounts to draw in customers hunting for affordable gifts as wages stagnate. Failure by Congress to extend tax breaks, and a slump in Europe caused by the region’s debt crisis represent risks early next year to sustaining gains in household purchases, which account for about 70 percent of the economy.
The Commerce Department’s spending report is due at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from gains of 0.2 percent to 0.6 percent.
Target began a three-day “Almost Last Minute Sale” on Dec. 8 with markdowns on such items as Stanley Black & Decker Inc. coffee makers and gift card giveaways. A week earlier, the discount chain held the “Big Toy Event” offering half off a second item.
Discounting Merchandise
“Retail has been very promotional and consumers have been value conscious,” Brian Dunn, chief executive officer at Best Buy, the world’s largest consumer-electronics retailer, said on a Dec. 13 conference call. “We purposely planned to take a leadership stance in the marketplace and stepped up our promotional efforts to do so.”
Through last week, the Standard & Poor’s Supercomposite Retailing Index of 94 companies has increased 2.9 percent since the end of last year compared with a 3 percent decline in the broader S&P 500.
Automakers did well last month. Sales of cars and light trucks advanced 3 percent in November to a 13.6 million seasonally adjusted annualized rate, the highest since August 2009, according to researcher Autodata Corp.
Another report from the Commerce Department at the same time may show demand for durable goods, those meant to last at least three years, rose 2.2 percent in November after a 0.5 percent decline the prior month, according the economists surveyed.
Global Demand
Growth in emerging markets is helping sustain demand for U.S.-produced goods. Deere & Co., the world’s largest farm- equipment maker, on Nov. 23 reported fiscal fourth-quarter profit and forecast 2012 earnings that topped analysts’ estimates.
“We expect sound farmer confidence and strong equipment demand,” investor communications manager Susan Karlix said on a conference call.
“The economy has been expanding moderately, notwithstanding some apparent slowing in global growth,” Federal Reserve policy makers said in their latest statement on Dec. 13 following a meeting. “Household spending has continued to advance, but business fixed investment appears to be increasing less rapidly and the housing sector remains depressed.”
The housing market remains a weak link in the recovery that began in June 2009. The National Association of Realtors this week reported revised figures for existing-home sales showing annual purchases were an average of 14 percent lower than previously reported going back to 2007.
Home Sales
Sales of new houses, due from the Commerce Department today at 10 a.m., probably rose 2.6 percent to a 315,000 rate in November, according to economists’ estimates. That’s fewer than last year’s total of 323,000, which was the lowest on record.
The outlook for the world’s largest economy into 2012 hinges in part on Europe, where policy makers are struggling to contain a financial crisis that began two years ago in Greece and is threatening to spread. There is also fiscal policy uncertainty in the U.S., where congressmen are debating extension of breaks on employee withholdings and measures to cut the budget deficit by $1.2 trillion over 10 years.
--With assistance from Chris Middleton in Washington. Editors: Carlos Torres, Vince Golle
To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz in Washington at cwellisz@bloomberg.net
