Personal income in the U.S. came in nearly unchanged in the month of December, according to a report released by the Commerce Department on Friday, although the report still showed a bigger than expected increase in personal spending for the month.
The report said personal income inched up by less than a tenth of a percent in December after rising by 0.2 percent in November. Economists had been expecting another 0.2 percent increase.
Meanwhile, disposable personal income, or personal income less personal current taxes, dropped by 0.2 percent in December after inching up by 0.1 percent in the previous month.
The modest drop in disposable personal income was partly due to a $14.3 billion decrease in farm proprietors' income.
At the same time, the Commerce Department said personal spending climbed by 0.4 percent in December following a 0.6 percent increase in November. The spending growth exceeded economist estimates for a 0.2 percent uptick.
Real spending, which is adjusted to remove price changes, increased by a more modest 0.2 percent in December.
With the increase in spending, personal saving as a percentage of disposable personal income, dropped to 3.9 percent in December from 4.3 percent in November.
Peter Boockvar, managing director at the Lindsey Group, said, "Bottom line, spending was good but spenders are drawing on savings in order to drive it, but hopefully soon we'll see a pickup in income growth as anecdotal signs of wage pressures are beginning to arise."
The Commerce Department also said its reading on core consumer prices, which exclude food and energy prices, increased at an annual rate of 1.2 percent in December compared to the 1.1 percent increase in November.
by RTT Staff Writer
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