Personal Spending, Consumer Sentiment Both Post Gains

Consumers are feeling better about the state of the economy and they are proving it through their spending habits two economic reports showed Monday.

The University of Michigan released its final report on consumer sentiment for the year, which posted a gain of more than two points in its December index. During the final month of the year, the school’s consumer sentiment index rose to 86.7 from the 84.2 it posted in November.

Preliminary estimates of the index by the university put the index at 87 even.

The Commerce Department, in a separate report, said that consumer spending in November rose 0.5%, while income rose only 0.3%.

Analysts said that consumer spending has been a huge boost to the economy as it tries to recover from what Federal Reserve Chairman Alan Greenspan called a “soft patch.”

After adjusting for inflation, Americans spent $6.63 trillion in November, the report said.

Bloomberg said that several companies have reported lackluster sales in December, indicating that the growth in spending did not carry over into December.

Spending has been helped by increased purchases of durable goods and homes, the report said.