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U.S. Personal Spending Rises Slightly More Than Expected In November

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While the Commerce Department released a report on Tuesday showing that U.S. personal income rose by slightly less than expected in the month of November, the report also showed that U.S. personal spending increased by slightly more than expected.

The report said personal income increased by 0.4 percent in November following an upwardly revised 0.3 percent increase in October.

Economists had expected income to climb by 0.5 percent compared to the 0.2 percent growth originally reported for the previous month.

Disposable personal income, or personal income less personal current taxes, rose by 0.3 percent in November, matching the increase seen in October.

Meanwhile, the Commerce Department said personal spending climbed by 0.6 percent in November compared to the 0.5 percent increase expected by economists.

The report said the increase in personal spending in October was also upwardly revised to 0.3 percent from 0.2 percent.

Real spending, which is adjusted to remove price changes, jumped 0.7 percent in November after edging up by 0.2 percent in each of the two previous months.

Paul Dales, Senior U.S. Economist at Capital Economics, said the increase in real spending means that consumption growth in the fourth quarter could be as strong as 4.0 percent even if real spending were flat in December.

"It is clear that real consumption is being boosted by the effects of lower gasoline prices and the acceleration in job growth," Dales said.

He added, "The upshot is that it is now possible that GDP growth in the fourth quarter will be even stronger than our current 3.0 percent forecast."

With spending rising faster than income, personal saving as a percentage of disposable personal income dipped to 4.4 percent in November from 4.6 percent in October.

The Commerce Department also said its personal consumption expenditures price index fell by 0.2 percent in November after coming in unchanged in October. The annual rate of growth subsequently slowed to 1.2 percent from 1.4 percent.

Core PCE prices, which exclude food and energy prices, were unchanged in November and were up 1.4 percent year-over-year.

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