Consumers Open Wallets Wide

Spending index records biggest increase since July 2005

By Jonas Oransky, Newser Staff

Posted Dec 21, 2007 11:14 AM CST

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Consumers Open Wallets Wide — College student Stephanie Sequeira, right, buys herself a MacBook Pro while holiday shopping with her friend, Gillian Walsworth, center, at the Apple Store San Francisco. Research by Student Monitor shows Apple is the top choice for college freshman planning to buy a computer within the next 12 months.... (Associated Press)

Consumer spending grew 1.1% in November, its biggest rise since July 2005. The better-than-predicted figure accompanied a revised 0.4% October gain, adjusted from 0.2%. Taken together, the numbers “postpone fears of a recession at least until next year,” said one economist. Jobs numbers and salaries were up, Bloomberg reports, potentially staving off a spending collapse.

The news wasn’t all good, though,: Disposable income—funds left after taxes—decreased 0.3% when adjusted for inflation. Retail surveys also show shopping cooling in December. Best Buy’s chief executive countered that the holiday season has started slowly in recent years, and the lag shouldn't be a cause for concern. (More consumer spending stories.)

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