Consumer expenditure in the United States rose steadily in November, marking a similar 0.5% increase in October, according to figures released by the Commerce Department's Bureau of Economic Analysis (BEA) on Thursday. This consistent upward trend in consumer spending, which constitutes over two-thirds of the nation's gross domestic product (GDP), suggests the economy is poised to report a third consecutive quarter of considerable growth.
Economists surveyed prior to the report had anticipated a 0.5% rise in consumer spending for November, confirming expectations with the released data. However, publication of the combined October and November datasets experienced delays due to the 43-day federal government shutdown.
Earlier on the same day, the BEA noted that the U.S. economy expanded at an annualized rate of 4.4% during the third quarter, accelerating from 3.8% in the April to June period. Supporting these robust figures, the Atlanta Federal Reserve currently projects a 5.4% annualized growth rate for GDP in the fourth quarter.
The ongoing economic expansion is principally fueled by consumer expenditures and a narrowing trade deficit, the latter largely influenced by President Donald Trump's comprehensive tariff regime that has restricted imports. However, these tariffs have contributed to elevated consumer prices. Analysts highlight a divergence in spending patterns: affluent households sustain consumption growth, while those with lower and middle incomes have constrained flexibility in adjusting their purchasing behavior. This disparity has been characterized as a "K-shaped" economic recovery.
This bifurcation in consumption persisted into early January. The Federal Reserve's Beige Book, published last week, documents that several Federal Reserve districts observed stronger spending among high-income consumers, who have increased their outlays on luxury items, travel, tourism, and experiential activities.
Challenges in Inflation Measurement Due to Government Shutdown
Inflationary pressures appeared to moderate in October and November, but this observation is complicated by data limitations resulting from the federal government shutdown. During the shutdown, the government was unable to collect essential data necessary for compiling the Consumer Price Index (CPI) report for October, and many data points for October's import price report were also missing. Similar gaps impacted the November CPI and import price statistics.
Despite these challenges, the government successfully published the Producer Price Index (PPI) report for October. Since the Personal Consumption Expenditures (PCE) price indexes monitored by the Federal Reserve for its 2% inflation objective incorporate data derived from the CPI, PPI, and import price reports, the BEA applied statistical methods to estimate missing values. Specifically, the BEA calculated seasonally adjusted price indexes for October by taking the geometric mean of the September and November CPI data. Non-seasonally adjusted October price indexes were then derived by applying seasonal adjustment factors from October 2024 to these imputed seasonally adjusted values for October 2025.
The PCE price index rose by 0.2% in November, mirroring the gain in October. Year-over-year, the PCE price index increased by 2.8% through November, slightly up from a 2.7% rise in October. Excluding the more volatile food and energy categories, the so-called core PCE price index also advanced 0.2% in November, continuing the October pace. In the 12 months through November, core inflation rose 2.8%, up marginally from 2.7% the previous month.
Preliminary data from December's CPI indicate that the core PCE inflation may have accelerated, with estimates reaching increases of up to 0.4%, implying a potential 3.1% annualized rise. The December PCE inflation data is scheduled for release on February 20.
Market participants generally expect the Federal Reserve to maintain current interest rates in its forthcoming policy meeting later this month.