Washington, DC, Feb. 2--Consumer spending increased in December and outpaced an uptick in income. But the personal savings rate was the lowest recorded all year.
Personal spending rose 0.4%, after a revised 0.5% gain in November, the Commerce Department reported Monday. Income edged up 0.2%, following a revised 0.3% increase.
Economists had expected spending to rise 0.5% and income to climb 0.1%, according to a survey by Dow Jones Newswires and CNBC.
Disposable personal income, or income after taxes, rose 0.2%, after a 0.3% advance in the prior month.
The government last week gave its first estimate of gross domestic product during the last three months of 2003. It showed the economy--and consumer spending--slowed sharply from the red-hot pace of the third quarter. Consumer spending makes up about two-thirds of U.S. economic activity.
Spending on durable goods, items such as cars and refrigerators that are meant to last three years or more, rose 1.8%, after a 1% increase in November, the Commerce Department reported Monday.
Spending on nondurable goods, items such as food and clothing, was flat, after a 0.7% gain. Spending on services grew 0.4%.
Personal saving as a percentage of disposable personal income dropped to 1.3% from 1.5%. It was the lowest level since the 1.3% recorded in December 2002.
An inflation measure in the report fell. A price index for personal consumption expenditures less food and energy increased at a 0.7% rate, lower than its November pace of 0.9%.
