In this economy?? A look at how US consumers are doing

US retail sales rose unexpectedly last month as the holiday shopping season got off to a brisk start, according to a Commerce Department report published Thursday.

The news extended a week of positive readings for the US economy: the unemployment rate fell in November, inflation cooled, and the Federal Reserve said it’s pivoting away from raising interest rates and is now considering when to cut them.

• The good vibes have also spread to the stock market, where all three major indexes are in the midst of their longest weekly winning streak since 2017, pushing the Dow to a new record high.

Some other consumer-focused things you should know about the US economy

Auto market: It’s a tough time to be in the market for a vehicle – buying or selling. Prices for new vehicles remain elevated, the Fed’s recent interest rate hikes have made auto loans more expensive, and used-car values have depreciated by over 20% since early 2022.

Housing: Average US mortgage rates fell below 7% last week for the first time since August, though rates remain near a 23-year high set two months ago. Median US home prices and rent have both risen at an annual rate of ~3% so far this year, with both figures projected to decline in 2024 and bring down overall US inflation.

Wages and inflation: Inflation outpaced average US income growth by multiple percentage points for most of 2022 – but that trend reversed this year, with average wages growing by 5.2% through November compared to 3.9% inflation over the same period. Still, a CBS News poll published last week found more than three-quarters of Americans (76%) say their income isn’t keeping up with inflation.

• One possible explanation: the recent loss of pandemic-era aid from the government has left lower-income Americans materially poorer.
• Adjusting for government transfers and taxes, the average annual income for the lower half of US earners is currently $26,100 – down from $34,800 when President Biden took office nearly three years ago, per an analysis by Cal Berkeley economist Gabriel Zucman.

👀 Looking ahead... The US economy is on track to achieve a “soft landing” and avoid a recession next year as inflation returns to the ~2.0% level the Fed considers normal, according to projections released Friday by the nonpartisan Congressional Budget Office.

📊 Flash poll: In general, do you consider yourself better off, worse off, or about the same compared to before the pandemic?

• Better off
• Worse off
• About the same