Consumer spending rose in November by the most in three years as incomes climbed, indicating fourth-quarter economic growth might be stronger than currently expected, according to the Commerce Department.
The rise in real spending was the largest increase since August 2009 and suggested purchases by consumers were not taking the hit many expected due to growing fears the economy could slip into recession next year.
Most economists think economic growth will slow in the fourth quarter from the 3.1 percent pace of growth clocked in the previous three months, but Friday's data points to consumers offsetting some of the slowdown expected from an expected decline in the pace at which companies restock their shelves.
The department gave no indication that Superstorm Sandy, which slammed the East Coast in late October and kept many people out of work for weeks, had impacted the data or its collection in November.
Inflation-adjusted consumer spending rose 0.6 percent, and after-tax income climbed 0.8 percent when adjusting for inflation. Spending before taking into account changes in prices rose 0.4 percent.
Economists polled by Reuters had expected nominal consumer spending would rise 0.3 percent last month.