Retail Spending Surge Boosts Economy Ahead of Fed Decision

Consumer spending at retail stores increased by 0.7% in November, surpassing October's rise. This growth indicates a robust economy despite higher interest rates, potentially slowing the Federal Reserve's rate cuts. The economy grew nearly 3% annually, though job market signs are mixed with steady pay growth.

Consumers have shown resilience by increasing their spending at retail stores last month, providing a significant boost to the economy at the onset of the winter holiday shopping season.

The Commerce Department reported a 0.7% rise in November retail sales, a notable improvement over October's 0.5% increase. This demonstrates continued economic growth, even amid elevated interest rates, indicating that the Federal Reserve may be cautious in lowering borrowing costs next year.

Despite mixed signals in the job market, where hiring has slowed yet layoffs remain low, the Fed is expected to lower its key rate on Wednesday. However, they may proceed more carefully with cuts next year, as paychecks grow at a steady pace, slightly outpacing inflation and boosting consumer spending.

(With inputs from agencies.)