Consumer spending up, ending slide

Government report shows larger-than-expected increase was first gain in 7 months; income also rose.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Ben Rooney, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Consumer spending rose more than expected in January, after declining for six consecutive months, according to government figures released Monday.

The Commerce Department report showed spending by individuals rose 0.6% last month, after dropping 1% in December. Economists surveyed by Briefing.com had forecast an increase of 0.4%.

January's increase comes after several months of anemic consumer spending as rising unemployment took its toll on household purchasing power. But economists expect consumer spending to remain weak in the months ahead as the economy continues to deteriorate.

"While this up-tick does not likely signal the start of a string of increases, we will take any good news on the economy these days," said Adam York, an economist at Wachovia Economics Group.

The report also showed that personal income rose 0.4% in January, following a decline of 0.2% in the previous month. Economists had forecast another 0.2% decline.

The personal income figure was boosted by pay raises for federal civilian and military employees, as well as cost of living increases for certain federal programs, according to the report. Excluding these factors, incomes rose 0.2% in January.

Personal savings rose $128.7 billion in January to $545.5 billion. The personal savings rate, expressed as a percentage of disposable personal income, jumped to 5% from 3.9% in December. At 5%, the savings rate is at a 14-year high.

"The savings rate is a better reflection of the caution that consumers are showing than the spending number," York said.

A big decline in consumer spending helped drive the nation's gross domestic product, the broadest gauge of economic activity, sharply lower during the last three months of 2008.

The government said last week that fourth quarter GDP fell at an annual rate of 6.2%, revised up from an earlier estimate of 3.8%. It was the worst decline in GDP in 26 years.

On Friday, a report from the Labor Department is expected to show that the economy lost 598,000 nonfarm jobs in January and that the unemployment rate rose to 7.9% from 7.6%.

Last month, the government reported that consumer spending rose an anemic 3.6% in 2008, the smallest full-year increase in 47 years.

Talkback: Are you living on your unemployment check? How are you making ends meet? What bills are you paying - and which ones are sliding? E-mail your story to realstories@cnnmoney.com and you could be part of an upcoming article. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
These 10 food trends could dominate 2015 So long, kale. Here's what's expected to shake up the food industry next year. More
Beyond Russia: Geopolitical hot spots in 2015 Investors beware: These 5 global crises are likely to rattle the stock market and world economy. More
These 20 antique guns could fetch big bucks Morphy Auctions in Pennsylvania is putting nearly 1,000 old guns on the block. Here are just a few. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.