Consumer spending in U.S. stalls as Americans boost savings

Posted 1/30/12

WASHINGTON - Consumer spending stalled in December as Americans used a jump in incomes to restore depleted savings, indicating the biggest part of the economy will not be a driver of the expansion.

Purchases were little changed after rising 0.1 percent the prior month, Commerce Department figures showed Monday in Washington. The median estimate of 77 economists surveyed by Bloomberg News called for a 0.1 percent increase in sales. Incomes increased by the most in almost a year, pushing the savings rate to a four-month high.

Households, whose spending accounts for about 70 percent of the economy, may be unwilling to overextend their finances as home prices continue to fall. The weak end to the quarter raises the odds the world’s largest economy will cool after growing at the fastest pace in more than a year.

“You had a very modest shopping season, and you can apply that same adjective to the momentum heading into 2012,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets Corp. in New York, who correctly projected spending would be unchanged. “You’re still looking at very modest job growth, very modest wage increases, so without the use of credit and saving, the consumer is going to struggle to gain much momentum.”

Stock-index futures held earlier losses after the report amid concern about Europe’s debt crisis as Greece signaled opposition to economic oversight in exchange for aid. The contract on the Standard & Poor’s 500 Index expiring in March fell 0.9 percent to 1,300.8 at 8:41 a.m. in New York.

Projections for spending in the Bloomberg survey ranged from decreases of 0.3 percent to increases of 0.6 percent.

Incomes Rise

Incomes climbed 0.5 percent last month, the most since March after a 0.1 percent gain the prior month. Economists forecast incomes would climb 0.4 percent, according to the Bloomberg survey. Wages and salaries increased 0.4 percent in December after little change a month earlier.

The gain in income helped push the savings rate up to 4 percent in December, the highest since August, a sign consumers may be working to restore depleted accounts.

Adjusted for inflation, which are the figures used to calculate gross domestic product, consumer spending dropped 0.1 percent, the worst performance since August.

Next Page
PBN Hosted

Join PBN for the best networking event and party of the winter - January 15, 2015 - the Book of Lists Party at the Providence Public Library. Reserve your spot early!
  • Best Places to Work
    Enrollment is now open for the 7th annual Best Places to Work program. Winners w ...
  • Manufacturing Awards
    Applications are now being accepted for the 2nd Annual Manufacturing Awards. Dea ...
Purchase Data
Book of Lists
Book of Lists cover
PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.
Data icons
Data can be purchased as single lists, in either Excel or PDF format; the entire database of the published book, in Excel format; or a printed copy of the Book of Lists.
  • Purchase an e-File of a single list
  • Purchase an e-File of the entire Book of Lists database
  • Purchase a printed copy of the Book of Lists
    Latest News