Personal income and spending in the U.S. rose in December last year, indicating that the average consumer is growing more confident about the economic recovery and the financial situation.
While income increased by $54.5 billion or 0.4 percent, in December month-on-month, personal spending rose $69.5 billion, or 0.7 percent, the Bureau of Economic Analysis (BEA) said on Monday.
Markets had expected income to rise 0.5 percent and spending by 0.6 percent.
“December's US personal income and spending data are largely old news, especially as disposable incomes in January will be boosted by the payroll tax cut that came into effect at the start of the year,” said Paul Dales, an economist with Capital Economics.
However, core personal consumption expenditures (PCE) price index, which excludes food and energy prices, increased less than 0.1 percent against the economists' expectations of 0.1 percent increase in December.
Personal savings totalled $614.1 billion in December, compared with $634.4 billion in November.
Manufacturing payrolls increased $0.2 billion in December following a contraction of $2.5 billion in the previous month. Besides, services payrolls rose sharply by $14 billion compared with an increase of $8.4 billion in November last year.
Also, government wage and salary disbursements increased $1.6 billion, compared with an increase of $1.3 billion.
“In short, January's income and spending data will look much stronger than today's report for December. But don't be fooled into thinking it will last. The boost to incomes, spending and savings will be short-lived. With jobs growth still weak, spending cannot grow at annualised rates of more than 4% indefinitely,” said Dales.