Consumer spending rose slightly less than expected in December as households opted to save extra cash, lifting savings to a six-month high, a government report showed on Monday.
The Commerce Department said spending rose 0.2 percent after increasing by an upwardly revised 0.7 percent in November. Consumer spending in November was previously reported to have climbed 0.5 percent. It was the third straight monthly gain in spending.
Analysts polled by Reuters had expected consumer spending, which normally accounts for over two-thirds of U.S. economic activity, to rise 0.3 percent last month.
For the whole of 2009, spending fell 0.4 percent, the largest drop since 1938.
Boosting consumer spending is critical to putting the economy on a sustainable recovery path, but a 10 percent unemployment rate is pressuring households.
The economy grew at a 5.7 percent annual pace in the fourth quarter, its fastest clip in six years, driven by a sharp slowdown in the rate at which businesses reduced stocks of unsold goods, the government said on Friday. Consumer spending slowed to a rate of 2 percent after rising 2.8 percent in the July-September period, the GDP report showed.
In December, spending adjusted for inflation edged up 0.1 percent after rising 0.4 percent the prior month. Personal income increased 0.4 percent last month after increasing 0.5 percent in November, the Commerce Department said. That was a touch above market expectations for a 0.3 percent increase. For the whole of 2009, personal income dropped 1.4 percent, the largest fall since 1938.
Real disposable income climbed 0.3 percent last month after rising 0.3 percent in November. The rise in income saw savings rising to an annual rate of $534.2 billion, the highest level since June. The savings rate rose to 4.8 percent from 4.5 percent the prior month. For the whole of 2009, savings rose to a record $502.7 billion.
Commerce Department data also showed the personal consumption expenditures price index, excluding food and energy, rising 1.5 percent from a year ago in December. The index, which is a key inflation measure monitored by the U.S. Federal Reserve, increased 1.4 percent in November.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)