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Earnings gains top spending
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February 2, 1998: 9:14 a.m. ET
Despite higher income, Americans kept reins on checkbooks in December
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NEW YORK (CNNfn) - U.S. workers earned more in December but kept their spending in check, according to statistics released by the U.S. Commerce Department Monday.
Personal income for American workers rose 0.4 percent during December to a seasonally adjusted annual rate of $7.053 trillion, pushing ahead of economists' expectations of a 0.3 percent gain.
However, personal spending, predicted to increase 0.5 percent, rose only 0.3 percent to a $5.608 trillion rate during December.
Jim Barkocy, domestic economist at Brown Brothers Harriman, called it a "decent but not spectacular" end to the year.
"In the back of a lot of consumers' minds is the uncertainty over the Asian crisis and how that will impact on them," he said.
The ongoing strength of the labor market in the United States has continued to put upward pressure on wages as employers seek to attract or keep workers.
That activity, more people working at higher incomes, has resulted in keeping wages at a high level. However, inflation watchers nervously keep an eye on these pressures as consumers with more money to spend could, conceivably, push up inflation.
The savings rate for Americans rose to 4.1 percent in December from 4 percent a month earlier. However, for the year, the savings rate stood at 3.8 percent, its lowest level since 1939.
Over all of 1997, personal incomes rose 5.8 percent, edging ahead of spending, which increased 5.4 percent.
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