Consumer spending in the U.S. climbed more than forecast in December even as incomes stagnated. Household purchases, which account for about 70 percent of the economy, rose 0.4 percent, after a 0.6 percent gain the prior month that was larger than previously estimated. The median projection of 81 economists in a Bloomberg survey called for a 0.2 percent rise. Incomes were unchanged, pushing the saving rate to the lowest level in almost a year. The report follows data yesterday that showed household spending rose in the fourth quarter at the fastest pace in three years, helping the economy overcome the fallout from the federal government shutdown. At the same time, absent bigger gains in pay, Americans will probably have difficulty sustaining the pickup into early 2014.
The Employment Cost Index report today showed the cost of employee compensation, including wages and benefits, climbed 0.5 percent in the fourth quarter from the previous three months. They rose 2 percent from the same period in 2012, the biggest year-to-year gain since the second quarter of 2011.
The Bloomberg survey of Personal Income called for personal incomes to rise 0.2 percent. And instead they got goose eggs, nada, nothing, zero, zilch. Last month’s unchanged reading followed an unrevised 0.2 percent gain in November.
For all of 2013, spending climbed 3.1 percent, the smallest advance since 2009.
Disposable income, or the money left over after taxes, dropped 0.2 percent in December after adjusting for inflation
from the prior month, the biggest decrease since January. Over the past 12 months, it decreased 2.7 percent, the largest year-to-year drop since November 1974, reflecting the impact of the expiration of the payroll tax break, the increase in some income taxes earlier in the year and weak wage gains.
Economic Event | Period | Economic Survey | Actual Reported | Original Prior | Revised Prior |
Employment Cost Index | 4Q | 0.4% | 0.5% | 0.4% | -- |
Personal Income | Dec | 0.2% | 0.0% | 0.2% | -- |
Personal Spending | Dec | 0.2% | 0.4% | 0.5% | 0.6% |
PCE Deflator MoM | Dec | 0.2% | 0.2% | 0.0% | -- |
PCE Deflator YoY | Dec | 1.1% | 1.1% | 0.9% | -- |
PCE Core MoM | Dec | 0.1% | 0.1% | 0.1% | -- |
PCE Core YoY | Dec | 1.2% | 1.2% | 1.1% | -- |
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John Broussard
Assistant State Treasurer
Chief Investment Officer
State of Louisiana
Department of the Treasury
225-342-0013
jbroussard@treasury.state.la.us
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