Washington, DC, December 22, 2006--Personal spending rose in November at the fastest pace in four months as incomes increased and retailers offered discounts to lure holiday shoppers.
The 0.5 percent rise in spending followed a 0.3 percent gain in October that was more than previously reported, the Commerce Department said today in Washington. Incomes increased 0.3 percent for a second month, and a measure of inflation was unexpectedly unchanged.
Economists had expected spending to rise 0.6 percent last month, after a previously reported 0.2 percent rise. Personal income was forecast to rise 0.4 percent.
The report's price gauge tied to spending patterns and excluding food and energy costs, the Fed's preferred measure on inflation, was unchanged after a 0.2 percent gain in October. Compared with November 2005, the price index was up 2.2 percent, the smallest year-over-year gain since May.
Adjusted for inflation, spending rose 0.5 percent for a second month, today's report showed.
The savings rate fell to minus 1 percent, from minus 0.7 percent in October because the gain in spending exceeded the rise in income. A negative rate suggests consumers are dipping into savings to maintain spending.
Disposable income, or the money left over after taxes, rose 0.3 percent after a 0.2 percent increase the month before.
Adjusted for inflation, disposable income increased 0.3 percent in November following a 0.4 percent rise.
Inflation-adjusted spending on durable goods, such as autos, furniture, and other long-lasting items, rose 1.6 percent after rising 0.6 percent. Purchases of non-durable goods increased 1 percent after a 0.7 percent gain. Spending on services, which account for almost 60 percent of all outlays, rose 0.1 percent.
