-US December personal income +0.4%; spending +0.3%
--US December wages and salaries +0.2%
--US December services spending +0.9%; durable goods spending -1.9%
--US December personal saving rate up to -0.8%; November -0.9%
--US December PCE price index +0.2%; core PCE prices +0.1%
--US December PCE price index +2.4% from year ago; core +1.8%
--US November personal income revised to +0.2% from +0.4%
--US November personal spending unrevised at +0.3%
--US 2000 personal income +6.3%; spending +7.8%
By Simon Kennedy, BridgeNews
Washington--Feb. 1--U.S. personal income growth in December topped spending for only the fourth time in 12 months, the Commerce Department reported Thursday. Incomes increased 0.4%, double November's revised gain while consumer spending advanced 0.3% for the third month in a row. In the latest troubling sign for U.S. manufacturers, spending on durable goods dropped for the third consecutive month.
* * * Economists surveyed by BridgeNews had predicted that consumer spending and income would each rise 0.2%.
Spending on durable goods--such as autos, appliances and furniture--fell 1.9%, the biggest drop since May 1999, after decreasing 0.9% in November and 1.1% in October. Manufacturers continued to struggle amid slowing demand, high interest rates and soaring energy bills.
Durable goods are those with a lifespan of over three years, such as cars and electrical appliances, meaning they are the most sensitive to changes in interest rates.
Spending on services--anything from utility bills to vacations--was up 0.9%, having been reported up 0.8% in the prior month. Services make up about 60% of consumer expenditures.
Meanwhile spending on non-durable goods such as food, clothing and gasoline, was unchanged.
On the income side, wages and salaries, which comprise over half of personal income, posted a 0.2% increase, after a rising 0.3% in November. However, disposable income--personal income minus tax and some non-tax payments--rose 0.4%, Commerce said.
In 2000 as a whole, personal income rose 6.3%, while spending was up 7.8%.
That's a pickup from 1999, when incomes were up 5.4%, while spending climbed 7.1%.
INFLATION
The implicit price deflator for personal consumption expenditures, the Fed's preferred gauge of consumer inflation, rose 0.2%, matching November's increase. Excluding volatile food and energy prices, the deflator rose 0.1% following a 0.2% advance the prior month. The December index was 2.4% higher than a year earlier, while the core index was up 1.8%.
SAVING RATE
Personal savings as a percentage of disposable personal income remained in negative territory but rose from a record of minus 0.9% in November to minus 0.8% in December.
WHAT WAS EXPECTED:
Estimates of economists surveyed by BridgeNews ranged from flat to up 0.5% for December personal income, and from down 0.2% to up 0.4% for spending.
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