Consumer Spending Rises in December
Consumer spending rose 0.4% in December, the Commerce Department reported Jan. 31.
Commerce also said purchases rose 0.6% in November, a larger figure than was originally announced.
Economists had projected spending would increase 0.2% in December, Bloomberg News reported.
Inflation-adjusted spending on durable goods including cars declined 1.4%, after a 2.1% rise the prior month. Purchases of nondurable goods, including gasoline, increased 1%, Commerce said in its Jan. 31 report.
Full-year spending increased 3.1%, the smallest rise since 2009. Incomes were unchanged, pushing the savings rate to the lowest level in about a year, Bloomberg reported.
Guy LeBas, chief fixed income-strategist at Janney Montgomery Scott, told Bloomberg the increase in consumer spending “is a good sign for sustaining economic growth. Job creation will have to accelerate to sustain the current level of spending.”
A separate report showed consumer confidence declined in January, according to the Thomson Reuters/University of Michigan consumer sentiment index released Jan. 31.
The month’s final index declined to 81.2, from 82.5 in December.
The median estimate by economists called for confidence to decline to 81 after the preliminary reading of 80.4, Bloomberg reported.
“My guess is the consumer is going to take a bit of a breather,” Stephen Stanley, chief economist at Pierpont Securities, told Bloomberg. “The consumer is going to pull back a little bit in the first quarter relative to where they were in the fourth.”
