And in a second upbeat report, the Commerce Department said businesses increased their inventories in October after slowing inventory growth the previous month. The buildup in inventories should help the economy grow modestly in the final months of the year.
Commerce said Tuesday that business inventories rose a seasonally adjusted 0.8% as sales increased 0.7%, a fifth straight gain.
In September, businesses didn't increase their stockpiles after 20 months of gains. Many companies seemed concerned that consumer demand would fall after little growth in the first half of the year.
Yet the economy grew at a 2% annual rate over the summer, even after companies cut their inventories. The key reason for the growth was consumers — their spending grew at triple the rate from the spring.
That growth continued last month. Retail sales rose 0.2% in November, Commerce said Tuesday. That's lower than October's gain, which was revised higher to show a 0.6% increase. Still, more spending on retail goods is the latest sign that the U.S. economy continues to grow at a slow but steady pace.
The report is the government's first read on monthly consumer spending, which accounts for 70% of economic activity.
Sales rose at electronics and appliance stores, auto dealers, clothing stores and department stores. But sales fell at building materials stores, gas stations, and grocery stores.
A rebound in consumer spending helped revive the economy this summer after it slumped in the spring. Economists expect consumers have helped boost growth even further in the final three months of the year.
Americans spent $52.4 billion over the Thanksgiving holiday weekend, according to the National Retail Federation. The record amount was spurred by deep discounts and early store openings.
Sales for 21 chain stores rose last month, the International Council of Shopping Centers said.
Online holiday sales are also growing, although they are expected to peak this week. Many shoppers tend to complete orders by mid-month to allow time for presents to be shipped.
Merchants can make up to 40% of their annual revenue during the holiday shopping season, which includes November and December.
Automakers have also reported strong sales for November. Chrysler, Ford, Nissan and Hyundai reported double-digit sales gains. November is usually a lackluster month for auto sales because of cold weather. But automakers offered steep discounts and many consumers can't wait any longer to replace their aging vehicles.
Auto sales have rebounded from the spring, when the Japan earthquake and tsunami slowed supply chains and limited production at U.S. plants.
Consumers are spending more after cutting back earlier this year in the face of higher food and gas prices. That's a key reason economists forecast that growth should pick up to about 3% in the fourth quarter, which would be the fastest pace in 18 months.
More demand has helped boost hiring. Employers added a net 120,000 jobs last month. The economy has generated 100,000 or more jobs five months in a row — the first time that has happened since April 2006.
Still, many economists question how long consumers can continue increasing their spending without more jobs and higher pay. Unemployment remains high, and inflation-adjusted incomes shrank in the July-September quarter.
Consumers might also have to cut back on spending if Congress doesn't extend a Social Security tax cut or emergency federal unemployment benefits. Both expire at the end of this year. The Social Security tax this year boosted take-home pay for the average family by $1,000.
Economists also fear that Europe's debt crisis could worsen and plunge the region into a recession. That could slow demand for U.S. exports, tighten lending and make it harder for U.S. businesses to expand.
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