US consumers boost spending over vital holiday shopping season

US consumers boosted their spending in November as the key holiday shopping season began, drawing from rising incomes to add their buying power to a slow but steady expansion, a government report showed.

Spending climbed by 0.5% to a seasonally adjusted annual rate of $7.413 trillion last month after a 0.4% rise in October, the Commerce Department said.

That was a promising beginning for the vital Thanksgiving-to-Christmas shopping season though final weekend reports from retailers have been mixed. Retailers rely heavily upon the period to bolster their annual sales and profits.

Some of the November spending gains came from auto dealers' aggressive pursuit of sales, using 0% financing and other incentives to clear their lots of this year's models and make way for the 2003s. Durable goods spending a category that includes new cars and trucks grew $13.3 billion to a seasonally adjusted annual rate of $873.5 billion.

The pace of US economic growth, which hit a healthy 4% annual rate in the third quarter, is forecast to have slowed sharply in the current fourth quarter.

Analysts said the incomes and spending data were somewhat encouraging for prospects ahead.

"It's consistent with the economy maintaining a moderate pace of growth," said economist David Sloan.

"The economy doesn't look particularly strong, but it suggests fourth-quarter GDP (gross domestic product) forecasts may get a marginal boost."

Incomes rose 0.3% in November to an annual rate of $9.078 trillion. That was a fourth straight monthly pickup. Incomes have grown 0.3% in each month since August. The October income number was revised up from a smaller 0.1% rise reported a month ago.

The gain in personal incomes topped Wall Street economists' forecasts for a 0.2% rise but the spending increase was on target with forecasts.

Analysts said better-than-expected income numbers were encouraging, since they leave consumers who fuel two-thirds of national economic activity in better shape to keep spending.

"It's positive that (personal income) came in a little bit better than expected. It was also encouraging that the October number was revised substantially upward," said Patrick Fearon, an economist at AG Edwards and Sons.

The Commerce Department said wages and salaries paid by private industry gained at a solid $17.7 billion annual rate last month, close to twice the $9.5 billion gain in October.