FILE - In this Nov. 25, 2011 file photo, shoppers scramble for door buster deals at Target, in Bowling Green, Ky. U.S. consumers spent at a lackluster rate in November as their incomes barely grew, suggesting that U.S. households may struggle to sustain their spending into 2012.(AP Photo/Daily News, Joe Imel, File)
FILE - In this Nov. 25, 2011 file photo, shoppers scramble for door buster deals at Target, in Bowling Green, Ky. U.S. consumers spent at a lackluster rate in November as their incomes barely grew, suggesting that U.S. households may struggle to sustain their spending into 2012.(AP Photo/Daily News, Joe Imel, File)
WASHINGTON (AP) ? Consumers spent at a lackluster rate in November as their incomes barely grew, suggesting that Americans may struggle to keep spending more into 2012.
Consumer spending rose just 0.1 percent in November, matching the modest October increase, the Commerce Department reported Friday. Incomes also rose 0.1 percent. That was the weakest showing since a 0.1 percent decline in August.
Both the spending and income gains fell below expectations. Economists have said that solid increases in spending could boost economic growth in the final three months of what has been a disappointing year.
Paul Ashworth, chief U.S. economist at Capital Economics, called the consumer spending figure disappointing. He said it would probably mean lower economic growth than had been expected.
Rather than grow at an annual rate of up to 3 percent in the October-December quarter, the economy will likely expand at a rate of about 2.5 percent this quarter, Ashworth says. That would still be an improvement from the 1.8 percent growth in the July-September quarter.
Separately, the government said companies' demand for long-lasting manufactured goods rose by the largest amount in four months in November, driven by a jump in orders for planes.
Orders to U.S. factories for durable goods rose 3.8 percent in November. It was the biggest gain since July. But so-called core capital goods, a proxy for business investment spending, dropped for a second straight month. They fell 1.2 percent.
The declines in business capital goods excluding aircraft raise doubts about a pocket of strength for the economy this year. Business investment spending has surged as companies stepped up orders to take advantage of tax breaks that are set to expire at year's end.
While the economy remains vulnerable to threats, particularly a recession in Europe, the job market has improved, lifting hopes for next year.
The government said this week that applications for unemployment benefits fell by 4,000 last week to 364,000. It was the third straight weekly drop. And it pushed applications to the lowest level since April 2008, in the midst of the Great Recession.
The weakness in incomes reflected a decline in wages and salaries, the biggest component of incomes, in November.
The sluggish gain in spending was held back by a 0.3 percent fall in spending on non-durable goods such as food, clothing and gasoline. Spending on durable goods jumped 0.8 percent. It reflected the solid auto sales during the month.
Spending on services, which includes such items as medical treatments and rent, rose a modest 0.1 percent.
After-tax incomes showed no growth in November. The savings rate dipped to 3.5 percent of after-tax incomes, down from 3.6 percent in October. Both months marked the lowest savings rate since late 2007. They show that consumers are having to tap their savings to finance their spending because of the weak income growth.
The small rise in overall consumer spending was puzzling given that other reports have shown solid holiday shopping this season. Those reports had caused many economists to revise up their growth forecasts for the current quarter.
Analysts at JPMorgan think the economy is growing at an annual rate of 3.5 percent in the current October-December quarter. That would be up from 1.8 percent growth in the July-September quarter and would be the best quarterly gain since the spring of 2010.
Economists still expect that growth to be driven by an improvement in consumer spending, which accounts for 70 percent of economic activity. Spending rose at a 1.7 percent rate in the third quarter, more than double the second-quarter gain. JPMorgan analysts expect consumer spending to grow at a 3 percent pace in the current quarter.
Even with the spurt of activity at the end of the year, economists think growth for all of 2011 will be a lackluster 1.7 percent.
They had much higher expectations when the year began. But then a spike in gasoline prices held back consumer spending for other items. And the earthquake in Japan disrupted supply chains for auto and electronic parts, dampening factory production in the United States.
Many analysts do not expect growth in 2012 to be significantly better than in 2011. JPMorgan economists predict the economy will expand 1.9 percent in 2012, only slightly better than this year.
Associated PressSource: http://hosted2.ap.org/APDEFAULT/3d281c11a96b4ad082fe88aa0db04305/Article_2011-12-23-Consumer%20Spending/id-eff0e746b5ba414581d1d3496e20eaaa
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With Apple?s iPhone recently coming to market in 21 more countries and the likely launch of a new smartphone model from the Cupertino company in 2012, it may come as little surprise that Apple supplier Foxconn is planning to expand its Zhengzhou production facility in China, a move that will make it the biggest smartphone manufacturing plant in the world.
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