Source: Economics Group of Wells Fargo Bank, N.A.Summary
Consumer spending remains resilient according to the shutdown-delayed data for October and November. Today’s data suggest real PCE could expand nearly 3% in the fourth quarter, carrying forward the third quarter’s momentum. Yet the trend in income growth remains soft. Real disposable income moderated to 1.0% year-over-year in November, continuing to run well behind real consumer spending, which was up 2.6% over the same period. While the gap between income and spending growth raises concern about the sustainability of the recent pace of outlays, upcoming tax relief should help sustain a 2.0%-2.5% pace of real consumer spending through 2026.