Key Highlights

  • The increase in third-quarter real GDP was unchanged at 2.8%, with personal consumption revised down to 3.5% from 3.7%.
  • Plans to purchase a vehicle in the next six months remained high despite a slight decline from October.
  • Consumer confidence rose by 2.8% in November, with plans to purchase vehicles remaining high.

GDP

The increase in third-quarter real GDP was unchanged at 2.8%, reflecting steady economic growth.

  • Real GDP growth year over year was unchanged at 2.7%.
  • Personal consumption was revised down to an increase of 3.5% from 3.7%.
  • Spending on goods was revised down to a 5.6% increase from a 6.0% increase.
  • Gross private investment was revised up to a gain of 1.1% from 0.3%.

Personal Income and Spending

Consumer spending growth decelerated in October as expected, while personal income growth accelerated and was much stronger than expected.

  • Consumer spending growth decelerated to 0.4% in October from 0.6% in September.
  • Personal income growth reaccelerated to 0.6% from 0.3% in September.
  • Spending on motor vehicles and parts increased by 1.0% after a 2.0% increase in September.

Inflation

The Personal Consumption Expenditure Index (PCE), the key gauge of inflation that the Fed follows, was steady at 0.2% growth in October as expected.

  • Overall price inflation, according to the PCE, increased as expected to 2.3% year over year from what had been the lowest level of 2.1% since February 2021.
  • The core inflation rate increased slightly to 2.8% from 2.7%, as expected.
  • Factoring in inflation, real spending increased 0.1% in October, which was weaker than expected following an upwardly revised 0.5% gain in September.

New and Pending Home Sales

The housing market showed mixed trends, with new home sales declining significantly while pending home sales increased unexpectedly. The housing market remains depressed, with mortgage rates still high.

  • New home sales unexpectedly declined by 17.3% month over month in October, reaching the lowest level in two years.
  • Sales increased for the month in the Northeast and the Midwest but were down in the South and the West.
  • New home inventory increased by 2.1% month over month and was up 8.8% year over year.
  • Pending home sales increased by 2.0% in October, defying expectations of a decline, with sales up in every region for the month and compared to last year.
  • Inventory of pending homes is increasing and improving potential even with mortgage rates going up.

Consumer Confidence

Consumer confidence improved in November, driven by positive views of the present and future economic conditions. This optimism is reflected in continued strong plans to purchase vehicles.

  • According to the Conference Board Consumer Confidence Index®, consumer confidence increased by 2.8% in November, with the index up 10.6% year over year.
  • Plans to purchase a vehicle in the next six months remained high despite a slight decline from October.
  • The daily index of consumer sentiment from Morning Consult extended the streak of increases to five straight monthly gains.
  • The index was up 5.6% for the month, which left the index up 16.5% year over year.

Gas Prices

Gas prices declined in November, according to AAA, which contributed to improved consumer sentiment.

  • The national average price for unleaded gas declined by 2.3% in November from the end of October to $3.05 per gallon, which was down 6% year over year.