The week in review

• Personal Income: +0.50% (-1.0% prior)

• Consumer Spending: +1.3%

• Flash Nov. Mfg. PMI: 51.1 (58.4 cons.)

The week ahead

• November Jobs Report

• Consumer Confidence

• ISM Mfg. and Svcs. PMIs

Thought of the week
As Americans gathered around the Thanksgiving dinner table last week and recited what they were thankful for, they likely weren’t talking about the economy. Rising costs at the grocery store and higher rent and utility bills, while stores remain poorly stocked and restaurants understaffed, have all contributed to worsening consumer sentiment. Sentiment came in at 67.4 for November, 6% below the pandemic trough in April 2020 despite the economy having improved markedly since then. Nevertheless, American workers do have a lot to celebrate. Jobs are plentiful and after decades of stagnant growth, wages are rising across nearly all sectors of the economy. As inflation pressures and supply chain issues ease, we expect consumers to feel much better about the economy in 2022. In the meantime, when consumers feel gloomy they often indulge in “retail therapy” and consumer spending has been particularly strong heading into the holiday season. In October, retail sales and personal consumption expenditures bounced +0.9% and +1.3%, respectively. Further, our proprietary Chase credit and debit card data show that consumer spending in November month-to-date is up 13.8% y/y, while discretionary spending (excluding food) is up 20.5% y/y vs. 14.8% in October. Americans may not be happy about rising prices but so far, it’s not stopping them from spending. Alongside an expected bounce of inventories as companies rush to stock shelves, the U.S. should see a solid holiday spending season.

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