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Published: Saturday, 12/24/2011

Consumer spending, incomes up for month

Orders to factories for durable goods rise

ASSOCIATED PRESS

WASHINGTON — Consumers spent at a lackluster rate in November as their incomes barely grew, suggesting Americans may struggle to spend more into 2012.

Consumer spending rose 0.1 percent in November, matching October’s increase, the Commerce Department reported Friday. Incomes also rose 0.1 percent. That was the weakest showing since a 0.1 percent decline in August.

The department also said companies’ demand for long-lasting manufactured goods rose by the largest amount in four months in November, driven by orders for planes.

Orders to U.S. factories for durable goods rose 3.8 percent, the biggest gain since July. But so-called core capital goods, a proxy for business investment spending, dropped for a second straight month, falling 1.2 percent.

A third Commerce Department report said new-home sales rose in November to a seven-month high, fueling evidence the housing market is stabilizing. Purchases of single-family homes increased 1.6 percent to a 315,000 annual pace. The gain pushed the number of new homes on the market to a record low.

Both the spending and income gains fell below expectations. Economists have said solid increases in spending could boost economic growth in the final three months of what has been a disappointing year.

Paul Ashworth, chief U.S. economist at Capital Economics, called the consumer spending figure disappointing. He said it probably would mean lower economic growth than had been expected.

Rather than grow at a 3 percent annual rate in the October-December quarter, the economy probably will expand at a 2.5 percent rate this quarter, Mr. Ashworth said. That still would be better than the July-September 1.8 percent rate.



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