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U.S. Personal Income And Spending Rise Less Than Expected

U.S. Personal Income And Spending Rise Less Than Expected
3/1/2012 9:30 AM ET

U.S. personal income and spending both increased by smaller than expected margins in January, according to figures released Thursday by the Commerce Department.

Personal income increased by $37.4 billion or 0.3 percent in January, a slowdown from the 0.5 percent growth seen in December. Most economists had forecast the rate of income growth to hold steady at 0.5 percent.

At the same time, consumer spending, formally known as Personal Consumer Expenditures, increased by 0.2 percent in January.

While that reflects an improvement after spending came in unchanged in December, the pace of growth came in below the 0.4 percent increase predicted by most economists.

Paul Dales, senior U.S. economist at Capital Economics, said, "Coming after the upward revisions to income in the second half of last year, which were released yesterday, January's personal income and spending data are disappointing."

The largest increases in personal incomes came in wages and salaries in the private sector, though government wages and salaries - notably for military personnel - also increased.

Also contributing to the increase were larger employer contributions for employee pension and insurance funds.

The Personal Consumer Expenditure Price Index, one of several measures watched for signs of inflation in the economy, increased by 0.2 percent in January, slightly bigger than the revised 0.1 percent increase in December.

The so called "core" PCE Price Index, adjusted to remove the volatile food and energy sectors, increased by 0.2 percent, matching the predictions of most economists, though slightly bigger than in December, which was revised down slightly to a 0.1 percent increase.

The personal savings rate fell slightly to 4.6 percent in January from the 4.7 percent posted in December, which was the highest rate since June of 2011.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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