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American consumers stepped up their spending last month, a good sign for the holiday shopping season.

As reported by the Associated Press, the Commerce Department said today (Dec. 22) that consumer spending rose a sharp 0.6% from October, outpacing a 0.3% increase in personal income. As a result, the savings rate fell to 2.9% of after-tax income in November, lowest since November 2007.

The numbers bode well for the holidays and for the overall economy: Consumer spending accounts for about 70% of U.S. economic output.

Spending on both goods and services rose in November, led by increases in purchases of recreational goods, vehicles electricity and gas.

The savings rate has been falling steadily since February when it was at 4.1%.

“The saving rate can’t fall forever,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a research note, “so income growth needs to pick up if consumers are to continue spending at their recent pace.”

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