NEW YORK (CNNMoney) -- As incomes slowly creep back up, Americans are spending more freely and saving less.
Personal income rose 0.4% in December, following a 0.4% increase in November, according to data released Monday by the Commerce Department.
Spending by individuals ticked up 0.7%, compared to a revised 0.3% spike the prior month.
That's good news for the recovery, as economists look to increased consumer spending to help drive job growth in 2011.
"On the consumer end, we ended off the year on a pretty decent note" said Jennifer Lee, senior economist with BMO Capital Markets.
Meanwhile, Americans saved $614.1 billion in December, compared with $634.4 billion the prior month. And personal savings as a percentage of disposable income nudged down to 5.3% from 5.5% in November.
Economists expect disposable income to increase further in January, boosted by the 2% payroll tax cut that started at the beginning of the year.
The core Personal Consumption Expenditures price index, an inflation gauge that strips out volatile food and energy prices and is closely watched by the Federal Reserve, fell to 0.7% -- the lowest level on record since the Commerce Department started tracking the data in 1959.
It falls far below the 1.6% to 2% inflation range the Fed is looking for. The central bank has said that low inflation levels are a key reason behind its controversial policy of pumping $600 billion into the economy.
Powerball jackpot tops $400 million, as change in the game to create longer odds against winning allows for more frequent big prizes. More
Trump supporters say they found deductibles and out-of-pocket costs under Obamacare to be unaffordable, according to a new Kaiser survey. More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
America's three biggest banks -- JPMorgan Chase, Bank of America and Wells Fargo -- earned over $6.4 billion last year from ATM and overdraft fees, according to an analysis by CNNMoney. More