NEW YORK (CNN/Money) - Personal spending rose in November, the government said Tuesday, but fell short of Wall Street forecasts, even as incomes posted solid gains.

Spending by consumers, which accounts for about 70 percent of the nation's economic activity, rose 0.4 percent after rising a revised 0.1 percent in October, the Commerce Department said.

Economists, on average, expected spending to rise 0.7 percent, according to Briefing.com.

"The confluence of factors that so lifted consumer spending in the third quarter is dissipating," said Lara Rhame, senior economist at Brown Brothers Harriman. "Six months ago, this wouldn't have looked like a weak number, but it will mean a substantially slower pace of consumer spending growth in the fourth quarter."

The department also said personal income rose 0.5 percent after rising a revised 0.2 percent in October. Economists, on average, expected income to rise 0.4 percent, according to Briefing.com.

Perhaps more critically for the Federal Reserve, the personal consumption expenditure (PCE) price index fell 0.1 percent, its first decline since April. The year-over-year rate of change in the index -- which Fed policy makers may follow more closely than the better-known consumer price index (CPI) -- shrank to 0.8 percent, excluding food and energy.

Despite higher commodity prices and other signs of impending inflation, consumer price inflation has been slowing down lately, raising some concerns about corporate profitability and allowing the Fed to keep its key short-term interest rate at the lowest level in 40 years.

"Every time you see a number that shows prices decelerating, immediately you have to think of sluggish re-hiring," Rhame said. "It means companies will still be closely guarding the bottom line and will be slow to add to labor."

Separately, the Commerce Department said third-quarter gross domestic product (GDP), the broadest measure of economic activity, rose at an 8.2-percent annual rate in the department's second revision of the number, matching economists' expectations.

The reports had little impact on U.S. stock prices, which rose slightly in early trading. Treasury bond prices fell.

The third quarter's blistering GDP growth rate was fueled by a surge in consumer spending, owing to the stimulative effects of tax rebate checks and cash from mortgage refinancing.

Though economists expected the growth rate of consumer spending to slow in the fourth quarter, they nevertheless expected a very strong holiday season, as well, thanks in part to signs of strength in the labor market.

Holiday sales have been relatively disappointing so far, however, partly because of bad weather and partly because the labor market's healing process has been agonizingly slow, keeping wage and salary growth anemic.

On Monday, Wal-Mart (WMT: Research, Estimates), the nation's biggest retailer, said December sales were at the low end of expectations. One of its key competitors, Target (TGT: Research, Estimates), said December sales were below plan.

But personal income growth -- which includes interest and other non-wage income -- rose in November at the fastest pace since 0.6 percent in May, driven in large part by 0.3-percent growth in wages and salaries, also the strongest since May and a hopeful sign for future consumer spending.

And the dip in inflation may have made November's gain in spending stronger than it looks on the surface, according to Stuart Hoffman, chief investment strategist for PNC Financial Services Group.

Though Hoffman and other economists expect the growth rate for fourth-quarter consumer spending to be just half that of the third quarter, that's still respectable and could result in a GDP growth rate of 4 percent or more, annualized.

"We've heard some disappointing reports about the final couple of weeks before the holidays, so we won't see as big of an increase in December," Hoffman said, "but when you combine November and December, this is about the best holiday season we've seen since 1999."