WASHINGTON: US consumers stepped up their spending in November and grew more optimistic this month, unexpectedly strong data showed on Friday, raising hopes a self-sustaining economic recovery was starting to unfold.
A slew of data this week has suggested the recovery is gaining momentum, pulling further away from the devastating recession that pushed unemployment to quarter-century highs and raising hopes the economy can return to normal growth without massive government support.
The economy snapped four straight quarters of decline by growing at a 2.8 percent annual rate in the third quarter.
Economists said the latest data suggested growth in the fourth quarter could come in at 4 percent or higher.
Retail sales rose 1.3 percent last month, the largest advance since August, the Commerce Department said. It was the second straight monthly gain and easily beat market expectations for a 0.7 percent increase. The strong sales data was seen boding well for the holiday shopping season, a view bolstered by a separate report that showed consumer sentiment improved in early December on signs of stabilization in the labor market.
The Reuters/University of Michigan Surveys of Consumers’ preliminary index of sentiment for December rose to 73.4, just a touch below the year’s high set in September, from 67.4 in November. Economists had expected a reading of 68.5. The upbeat data fanned speculation that the Federal Reserve could be forced to start thinking about raising interest rates sooner than had been expected.
That lifted the US dollar to a two-month high against the euro, while the prospect of tighter monetary policy limited gains in US stocks and pushed US Treasuries prices lower.
Meanwhile, the House of Representatives approved a $447 billion bill on Thursday that boosts funding for a large part of the US government and reflects priorities of Democrats who control Congress and the White House.
The House approved the spending bill by a vote of 221-202 and sent it to the Senate, which promptly began debate.
