WASHINGTON (Reuters) – US consumer spending accelerated in November and shipments of key capital goods orders increased for the 10th straight month, data showed on Friday, the latest signs of strong momentum in the economy as the year winds down.
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But the bullish growth picture was dimmed somewhat as the figures also showed household savings dropped last month to the lowest level in more than nine years. Low savings could hurt consumer spending, though economists are optimistic wage growth will pick up in the new year.
Economists see a modest lift to consumer spending from a $1.5 trillion tax cut package approved by the Republican-controlled US Congress this week, in the largest overhaul of the US tax code in 30 years.
“Consumers are still out there spending, but their purchases are being supplemented by low energy costs, credit and a reduction in savings rather than organic income growth,” said Lindsey Piegza, chief economist at Stifel Fixed Income in Chicago. “Without sustained improvement in wages, consumers will struggle to maintain even today’s moderate pace of consumption.”
The Commerce Department said consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.6 percent last month after gaining 0.2 percent in October.