Holiday crowds begin to gather in a shopping district at Rockefeller Center on the afternoon before Thanksgiving on November 26, 2025, in New York City. – Spencer Platt\/Getty Images <\/p>\n
Consumers continued to ramp up their spending as the holiday shopping season kicked into high gear in November, but inflation continued to bite, new data showed Thursday.<\/p>\n
A shutdown-delayed report from the Commerce Department showed that spending rose 0.5% from October, above economists\u2019 expectations for a 0.4% gain.<\/p>\n
Notably, nearly half of the month\u2019s spending increase came in two categories: health care and energy (including gasoline).<\/p>\n
When adjusted for inflation, consumer spending rose 0.3%.<\/p>\n
Despite a weakening job market, sour sentiment and high uncertainty, consumer spending hasn\u2019t faltered. Economists have noted that this could be a function of an increasingly imbalanced environment, or K-shaped economy, where high-wealth individuals are seeing continued gains and driving the bulk of the spending.<\/p>\n
While it\u2019s hard to tease out the effect of the K-shaped dynamic in the latest data, Thursday\u2019s report also showed that strong spending could soon run out of steam, said Oliver Allen, senior US economist at Pantheon Macroeconomics.<\/p>\n
\u201cI think the thing that\u2019s more striking in this report is just how flimsy the support for that growth is,\u201d he said. \u201cIncome growth now is looking really, really weak.\u201d<\/p>\n
In November, income rose 0.3% and just 0.1% after taxes. The savings rate (savings as a percentage of disposable income) dropped to 3.5%, the lowest since October 2022.<\/p>\n
The report also showed that inflation remained stubbornly higher than normal, according to the shutdown-delayed report that also included previously unreleased data for October.<\/p>\n
The Personal Consumption Expenditures price index \u2014 the inflation gauge the Federal Reserve uses for its 2% target rate \u2014 rose 0.2% on a monthly basis, which brought the annual rate to 2.8%, unchanged from the September rate<\/a> that was reported last month.<\/p>\n Consensus forecasts called for inflation to rise 0.2% from October and 2.8% for the year ended in November, according to FactSet consensus estimates.<\/p>\n The underlying inflationary trends remained sticky and stubborn as well. When excluding food and energy costs, which tend to be more volatile, the core PCE price index rose by 0.2% for the fifth month in a row. On an annual basis, the core PCE index rose 2.8% (matching the last reported rate for September).<\/p>\n Thursday\u2019s Personal Income and Outlays report is the latest in a line of critical economic data to be heavily disrupted by the 43-day government shutdown that lasted the entirety of October through the first 12 days of November.<\/p>\n