Spending Lags Personal Income

Personal income ticked higher in December, but spending failed to keep up.  Is America starting to save again?  The numbers were actually in-line with expectations and earlier released data.

Personal income in December was up 0.5 percent, following a 0.1 percent rise the prior month, versus the 0.4 percent bump up expected by Bloomberg.  Wages & salaries grew by a healthy 0.4 percent versus no change in November.

Consumer spending was a bit sluggish in December despite some of the high marks seen in selective retail data around the holidays.  The reading was FLAT (0.0) versus +0.1 percent in November and versus a 0.1 percent increase expected by Bloomberg.  Bloomberg noted, “Weakness was in both durables and nondurables, reflecting in part a decline in auto sales and gasoline prices. Durables dipped 0.4 percent after a 0.3 percent gain in November. Nondurables fell 0.4 percent, following a 0.3 percent decline. Services in December advanced 0.2 percent in both December and November.”

By the looks of it maybe those making money did less of the incremental spending.