Consumers stepped up their spending at retail stores last month, providing a boost to the economy in the early phases of the winter holiday shopping season.
Retail sales rose 0.7% in November, the Commerce Department said Tuesday, a solid increase and higher than October's 0.5% gain.
The boost in spending underscores that the economy is still growing at a healthy pace even with higher interest rates, a trend that could cause the Federal Reserve to lower borrowing costs more slowly next year than they have previously signaled. The Fed will announce its latest rate decision Wednesday.
The economy expanded at nearly a 3% annual pace in the July-September quarter and some economists forecast another solid gain in the final three months of this year. There are some signs of sluggishness in the job market, as hiring has weakened since last summer, but layoffs are also relatively rare and the unemployment rate is at a low 4.2%. Paychecks are growing a solid 4% pace, on average nationwide, which is modestly faster than inflation and helps fuel more spending.
On Wednesday, the Fed is expected to cut its key rate for a third time this year, after a big half-point cut in September and a quarter-point last month. But Fed officials, led by Chair Jerome Powell, are also expected to signal that they may reduce their rate only two or three times next year, leaving it far above its pre-pandemic level, when rates on mortgages, auto loans, and credit cards were much slower.
