November Business Conditions Monthly

Chart 1. Consumer expectations are rising, just in time for holiday spending.
Strong holiday spending could be a gift to the economy.

In April we predicted that consumer spending would lead economic growth over the next few quarters. Despite the weak 1.7 percent growth in real consumer spending in the first quarter, we saw that consumer fundamentals remained in good shape and were expected to improve. In fact, spending gained 3.6 percent and 3.3 percent in the second and third quarters, respectively.

This month we update the trends chart from our April Business Conditions Monthly to show that conditions are ripe for further increases. After hitting a short-term high in March, consumer expectations pulled back, reflecting a jump in retail gas prices as well as stock market declines. But both of those trends have reversed. Pump prices have fallen and stock prices have rebounded. We expect these favorable trends along with still-strong consumer fundamentals to boost consumer expectations just as holiday shopping kicks off later this month (Chart 1).

 

Next/Previous Section:
1.Overview
2. Economy
3. Inflation
4. Policy
5. Investing
6. Pulling It All Together/Appendix

Chart 1. Consumer expectations are rising, just in time for holiday spending.

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