Personal savings rate rises to 3.6%, most since May
U.S. real consumer spending fell in December for the sixth time in seven months as consumers saved what they gained from falling energy prices, the Commerce Department reported Monday.
Nominal spending fell 1% in December, the sixth straight decline. After adjusting for a 0.5% decline in prices, real consumer spending fell 0.5% in December, after a 0.3% increase in November, the government said. It was the sixth decline in real spending in the past seven months.
Nominal incomes fell 0.2% in December. After adjusting for inflation and after paying taxes, real disposable incomes rose 0.3%.
With spending falling faster than incomes, the personal savings rate rose to 3.6% in December, the highest since May when savings were boosted by tax-rebate checks.
The Commerce Department report fills in monthly details provided on a quarterly basis in the gross domestic product report released last Friday, which showed the economy contracted at a 3.8% annual rate in the quarter, the worst since the early 1980s.
Consumer prices fell 0.5% in December and were up just 0.6% compared with December 2007. Core prices - which exclude food and energy prices in order to highlight underlying trends - were flat in December and were up 1.7% since December 2007, within the Federal Reserve's target zone of 1% to 2%.
Last week, the Federal Open Market Committee cautioned that core inflation might head too close to zero for the Fed's comfort.
Details
Incomes measured in current dollars fell 0.2%, the third consecutive decline. Income from wages and salaries fell 0.3%, as more than a half million jobs were lost and hours worked were slashed.
Income from owning a business fell 0.6%. Income from assets fell 1.5%. Rental income rose 4.8%
Real spending (inflation-adjusted) fell 0.5%. Real spending fell 0.8% on durable goods, fell 1.8% on nondurable goods and rose 0.1% for services.
