Even in the face of the fast inflation in three decades, American consumers don’t seem to be afraid to spend.
That’s according to a Wednesday (Nov. 24) Bloomberg report, which says that this spending has positioned the economy for an end-of-year growth spurt.
Citing figures from the Commerce Department, the report says goods and services purchases increased 1.3%, the largest increase since March. Even with higher prices factored in, spending still outdid expectations, a signal that holiday shoppers have gotten an early start.
These figures — which showed a increase in business equipment orders, exports and sales of new homes — show why many economists have upped their forecasts for economic growth in the fourth quarter.
Read more: US Inflation Rate Surges Past 6%, Highest Since 1990
The Commerce Department report also makes things complicated for the Federal Reserve, where policy makers are attempting to balance increasing inflation and a job market that’s 4 million jobs short of pre-COVID-19 levels.
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The personal consumption expenditures prices gauge, sued by the Fed to measure inflation, rose 0.6% from a month earlier and 5% since October of 2020. Adjusted for inflation, spending rose 0.7% for goods and services.
“The combination of higher inflation risks and consumer resiliency means that the likelihood of the Fed accelerating the pace of taper has increased substantially,” Bloomberg Economics’ Anna Wong and Eliza Winger wrote after the report.
Earlier this month, the U.S. Bureau of Labor Statistics released figures showing the annual inflation rate in the U.S. jumped to 6.2% in October, the highest increase since 1990 and higher than an earlier projection of 5.8%.
Gasoline saw the biggest gain — 49.6% — while food costs rose from 4.6% to 5.3%, the most significant rise in 12 years.
