NEW YORK (CNN/Money) - The spending and income of U.S. consumers rose in January, the government said Monday in a report that fell short of Wall Street forecasts.
Spending by consumers, which accounts for about 70 percent of the nation's economic activity, rose 0.4 percent after rising a revised 0.5 percent in December, the Commerce Department said. Personal income rose 0.2 percent after rising a revised 0.3 percent in December.
Economists, on average, expected spending to rise 0.4 percent and income to rise 0.5 percent, according to Briefing.com.
The report had little impact on U.S. stock market futures, which pointed to a slightly higher opening on Wall Street. Treasury bond prices rose.
Wall Street pays close attention to consumers, whose spending makes up more than two-thirds of the total economy. Fueled by tax rebate checks and cash from a wave of mortgage refinancing, consumers hit the malls with gusto in the third quarter of 2003, pushing economic growth to the fastest annual pace in nearly 20 years.
But those stimulative effects faded in the fourth quarter, and the pace of consumer spending growth slowed down. Last week, the Commerce Department said consumption grew at a 2.7-percent annualized pace in the fourth quarter, well below the third quarter's 6.9-percent rate.
Economists hope bigger tax-refund checks -- the residual effect of last year's tax cuts -- and an improving job market in 2004 will boost income and spending this year.
Wages and salaries rose 0.6 percent in January after shrinking 0.1 percent in December, according to Monday's report. Dividend income also rose, while proprietorship, interest and rental income fell sharply.
Spending on durable goods -- items such as cars and refrigerators, meant to last three years or more -- dropped 3.3 percent after rising 1.7 percent in December, reflecting a drop in demand for automobiles. Spending on non-durable goods rose 1.5 percent, compared with December's 0.2-percent gain. Spending on services rose 0.7 percent, compared with 0.5 percent in December.
The savings rate -- savings as a percentage of disposable income -- rose to 1.8 percent from a revised 1.4 percent in December.
The department also said that its personal consumption expenditure (PCE) price index rose 0.3 percent after rising 0.2 percent in December. Excluding food and energy, the PCE price index rose 0.1 percent, compared with a 0.2-percent gain in December.
The year-over-year rate of change in the index -- which Federal Reserve policy makers follow more closely than the better-known consumer price index (CPI) -- rose slightly to 0.8 percent, excluding food and energy, from 0.7 percent in December.
|
