WASHINGTON (Reuters) - Consumer spending rose for a second straight month in November as incomes recorded their biggest gain in six months, data showed on Wednesday, boosting hopes of a self-sustaining economic recovery.
The Commerce Department said spending increased 0.5 percent after rising by a slightly downwardly revised 0.6 percent in October. Consumer spending in October was previously reported to have increased 0.7 percent.
Analysts polled by Reuters had expected consumer spending, which normally accounts for over two-thirds of U.S. economic activity, to rise a more robust 0.6 percent last month.
“On the margin, you’ll probably see less consumer spending than what people were thinking. It’ll shave back some expectations for Q4 but I don’t think this number is going to affect anybody’s view of the economic recovery,” said Tom Porcelli, senior economist at RBC Capital Markets in New York.
U.S. financial markets were little changed on the data.
The data was the latest evidence that households were starting to feel a bit more comfortable spending after a long period of restraint following the most painful U.S. recession in 70 years.
Data early this month showed a strong rise in retail sales in November, with gains spread across nearly all categories.
Analysts are looking for sustained gains in consumer spending for a clear indication of the economy’s ability to stand on its own without support from government stimulus.
The economy grew at an annual rate of 2.2 percent in the third quarter as government programs such as the popular “cash for clunkers” bolstered spending.
In an interview with ABC’s “Good Morning America” on Wednesday, Treasury Secretary Timothy Geithner said the economy was recovering, but it may be some months yet before jobs are being created instead of lost.
“The economy’s growing, it’s getting better, getting stronger and I think most people would say the economy is strengthening going into the end of the year...but the key thing is when do we get job growth back,” Geithner said.
Wednesday’s report showed spending adjusted for inflation rose 0.2 percent in November, adding to the prior month’s 0.4 percent gain. Personal income increased 0.4 percent last month, the largest increase since May, after rising 0.3 percent in October.
That was a touch below market expectations for a 0.5 percent increase.
Real disposable income climbed 0.2 percent in November after rising by the same margin in October. The rise in income saw savings increasing to an annual rate of $525.1 billion, but the savings rate was unchanged at 4.7 percent from the prior month.
Commerce Department data also showed the personal consumption expenditures price index, excluding food and energy, rising 1.4 percent from a year ago in November. The index, which is a key inflation gauge monitored by the U.S. Federal Reserve, increased 1.4 percent in October.
The Fed last week left overnight lending rates unchanged near zero, citing excess slack in the economy, and pledged to keep interest rates low for an “extended period.”
Reporting by Lucia Mutikani, Additional reporting by Glenn Somerville in Washington and Emily Flitter in New York; Editing by Andrea Ricci