Still Betting on US Consumers

Consumer spending rose again in November, with real retail sales rising more than 3.0% y/y (chart). Rising real labor and nonlabor incomes, plus a strong wealth effect from record highs in stock and home prices, have boosted spending for the past two years. The GOP election sweep also means the 2017 Tax Cuts and Jobs Act will likely be extended in full, and there's talk in DC of expanding the child tax credit from a maximum of $2,000 to $5,000 per kid. With another 25bps cut to the federal funds rate likely tomorrow, the outlook for the US consumer looks good.

Over the past three years, we advised betting on the consumers to keep the economy growing. We are sticking with that recommendation for 2025.