Savings rate rises to 4.8% of disposable incomes
By Rex Nutting, MarketWatch
WASHINGTON (MarketWatch) - Americans increased their spending in December at the slowest pace since September, allowing their savings rate to drift to the highest level since June, the Commerce Department estimated Monday.
Real consumer spending (that is, adjusted for inflation) rose a seasonally adjusted 0.1% in December after a 0.4% gain in November. It was the lowest since September's 0.7% decline.
Real spending is down 0.5% compared with December 2007, when the recession began.
Meanwhile, real after-tax incomes rose a seasonally adjusted 0.3% in December, boosted by transfer payments, small-business profits, income from investments, and a small gain in wages. Real disposable incomes have increased 2.5% since December 2007.
In nominal terms (not adjusted for inflation), spending rose 0.2% in December to an annual rate of $10.29 trillion and incomes rose 0.4% to an annual rate of $11.18 trillion.
Spending was weaker than expected, while incomes were higher. Economists surveyed by MarketWatch forecast a 0.4% increase in nominal spending and a 0.3% increase in nominal incomes. Read our complete economic calendar and consensus forecast.
With incomes rising faster than spending, the personal savings rate rose to 4.8% of disposable incomes, the highest since June.
The government data for December flesh out information reported on a quarterly basis last Friday, when the government said real gross domestic product increased at a 5.7% annual pace in the quarter, spurred by a slower reduction in inventories and modest increases in consumer spending and business investment.
Details
Inflation was modest. Consumer prices and core prices (which exclude food and energy) rose 0.1%. In the past year, consumer prices are up 2.1%, while core prices are up 1.5%.
Real spending on durable goods (including autos) rose 0.2% in December after a 2.3% increase in November. Spending on durable goods has held up well after the expiration of the government's cash-for-clunkers program.
Real spending on nondurable goods fell 0.8% after a 1% gain in November. Real spending on services rose 0.4% after no change in November.
Income from wages and salaries increased 0.1% after a 0.4% gain in November. Small-business income increased 0.8%. Income from assets rose 0.6%. Rental income rose 0.7%.
Income from transfer payments (such as Social Security, pensions and unemployment) rose 0.6%.
Real income excluding transfer payments - one of four key recession-expansion markers - rose 0.2% for the third straight gain.
The other three indicators are nonfarm payrolls, industrial output, and business sales. In the past few months, only payrolls have failed to turn significantly higher.
