skip navigation

By the Numbers

Featuring brief segments of economic analysis from our senior economist Michael Bazdarich, PhD.

The economic analysis we previously featured in By the Numbers is now available on the Western Asset Blog. This page will no longer be updated.

Consumer Spending Mixed in November, Goods Softish, Services Better

This morning, the Commerce Department released data on monthly consumer spending in November within its general release of revised 3Q19 GDP data. Aggregate real consumer spending rose a nice 0.3% in November, with a +0.1% revision to the previously estimated October spending level. The details were mixed, with goods consumption on the softish side, but services spending looking good.

We track “core” measures of goods and services spending, which measures abstract from especially volatile components such as motor vehicles, utilities and health care. The core goods spending measure rose a bit less than 0.2% in November, and there was an equal-sized downward revision to October, leaving this measure no higher in November than was initially estimated to be the case for October. For services spending, however, this aggregate showed a 0.1% increase in November, with a +0.3% revision to October. (The stronger gains in headline consumer spending came from outsized increases in health care and vehicle purchases, the latter reflecting the end of the GM strike.)

These data are portrayed in the chart below. As you can see there, underlying goods spending looks to have slowed a bit in recent months, consistent with what the retail sales data have indicated (cf. the By the Numbers installment from 12/13). However, there has been no slowing at all in services consumption, which is a larger component of total consumption.

We could pile on by repeating that goods spending is seasonally volatile at this time of year, since it is quite difficult to precisely seasonally adjust the data when Christmas shopping patterns vary with weather, date, timing and social customs. Furthermore, personal income data for November, also released today, continue to show healthy income growth. So, there is good reason to think that the recent softness in goods spending is ephemeral, or even illusory. (Certainly, the same-store sales results posted by big retailers do NOT indicate any holiday funk among Christmas shoppers.)

Bottom line, we think the underlying consumption trends look good, and we expect them to continue thus. None of the economic data released this month have been spectacular, but none of them have evinced any real weakness either. For now at least, we are enjoying a “Goldilocks” pace of economic growth: slow enough to keep the Federal Reserve sitting on its hands, but fast enough to gainsay gathering fears of brewing recession.

Thanks for reading these posts, and all of us at Western Asset wish you a Merry Christmas, Happy Holidays and successful investing in 2020.

Consumer Spending
Real Consumer Spending by Type
Source: Bureau of Economic Analysis. As of 30 Nov 19

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 45 years of experience to his position. "By the Numbers" will address economic data releases that are pertinent to a broad range of investors.

Prior to joining the Firm in 2005, Mike ran his own consulting firm, MB Economics. He earned his PhD in Economics at the University of Chicago.

Sign up to receive email updates as new reports are released.

© Western Asset Management Company, LLC 2022. This publication is the property of Western Asset and is intended for the sole use of its clients, consultants, and other intended recipients. It should not be forwarded to any other person. Contents herein should be treated as confidential and proprietary information. This material may not be reproduced or used in any form or medium without express written permission.
Past results are not indicative of future investment results. This publication is for informational purposes only and reflects the current opinions of Western Asset. Information contained herein is believed to be accurate, but cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice. Employees and/or clients of Western Asset may have a position in the securities mentioned. This publication has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation or needs. It is your responsibility to be aware of and observe the applicable laws and regulations of your country of residence.
Western Asset Management Company Distribuidora de Títulos e Valores Mobiliários Limitada is authorized and regulated by Comissão de Valores Mobiliários and Brazilian Central Bank. Western Asset Management Company Pty Ltd ABN 41 117 767 923 is the holder of the Australian Financial Services Licence 303160. Western Asset Management Company Pte. Ltd. Co. Reg. No. 200007692R is a holder of a Capital Markets Services Licence for fund management and regulated by the Monetary Authority of Singapore. Western Asset Management Company Ltd is a registered Financial Instruments Business Operator and regulated by the Financial Services Agency of Japan. Western Asset Management Company Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) (FRN 145930). This communication is intended for distribution to Professional Clients only if deemed to be a financial promotion in the UK as defined by the FCA. This communication may also be intended for certain EEA countries where Western Asset has been granted permission to do so. For the current list of the approved EEA countries please contact Western Asset at +44 (0)20 7422 3000.