Consumer spending fell in December as car sales slowed, according to the U.S. Department of Commerce’s Bureau of Economic Analysis.
Personal consumption expenditures decreased $40 billion, or 0.3%, the agency said Monday. This is after an increase of $58.8 billion, or 0.5%, in November, based on revised estimates. Purchases of motor vehicles and parts accounted for most of the decrease in December and most of the increase in November. December’s decline was the largest since 2009.
Personal income increased $41.3 billion, or 0.3%, in December, and disposable personal income increased $35.8 billion, or 0.3%. In November, the income numbers rose by similar amounts.
An Associated Press story on Monday said the report was not all bad. Consumer spending rose at a 4.3% annual pace during the last three months of 2014, and 2.5% for all of 2014, adjusting for inflation. That is the strongest pace since early 2006, before the financial crisis and resulting recession.
Other economic indicators point to a positive environment for spending. The University of Michigan’s consumer sentiment index remained at 98.1% in January, the highest reading since 2004, the AP wrote. Moreover, the Labor Department’s employment cost index, which measures pay and benefits, rose 2.2% in 2014, up from 2% the previous year.
“Further big real income gains and soaring confidence point to serious strength in spending,” Pantheon Macroeconomics’ chief economist Ian Shepherdson told the AP. “We would not be surprised to see gains approaching 5% annualized in the spring.”
Most analysts believe the momentum will continue as more jobs are created, AP wrote. Friday’s jobs report should show about 230,000 jobs added to the U.S. economy, analysts forecast.
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