Income, spending up

Pace of gains for spending and income both increase in December in line with forecasts; inflation reading tame.


NEW YORK (CNNMoney.com) -- American paychecks and spending both picked up steam in December, according to a government report released on Thursday.

The Commerce Department reported that personal income rose 0.5 percent in the month, up from the 0.3 percent rise seen in November. The December gain was in line with forecasts of economists surveyed by Briefing.com.

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Spending by individuals rose 0.7 percent, up from a 0.5 percent gain in November and also in line with economists' forecasts.

A closely watched inflation reading in the report, the core PCE deflator, which measures prices paid by individuals excluding food and energy, posted only a 0.1 percent rise, although that was up from no change in those prices seen in the November reading.

That left the year-over-year change in the core PCE deflator at 2.2 percent, just above what most economists believe is the Federal Reserve's comfort zone of a 1 to 2 percent rise in that reading.

Robert Brusca of FAO Economics said that the report is close to the picture of the economy laid out by the Fed when it left interest rates unchanged on Wednesday. It's statement suggested the economy was showing strength while inflation pressures were letting up.

"The data for the day is a contender for the Goldilocks award," said Brusca. "The right stuff, enough of it and no overdose in sight."

The report once again showed a negative savings rate of 1.2 percent, meaning that the typical American was spending $101.20 for every $100 of after-tax income. That's up slightly from the negative savings rate of 1.0 percent in November.

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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: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. 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 2018 and/or its affiliates.