NEW YORK (MainStreet) – Consumer spending rose 0.7% in December, according to new data released by the Commerce Department on Monday. The estimates mark the sixth straight month of rising spending and follow a 0.4% increase in November.
The latest increase seems to come at the expense of savings, as new data released along with the spending numbers indicate rising incomes but less saving among consumers. Personal income rose by 0.4% ($54.5 billion) in December, following a 0.3% increase in November and a 0.4% increase in October.
At the same time, Americans saved $614.1 billion in December, compared with $634.4 billion in November, according to the Bureau of Economic Analysis, which equals a 0.2% month to month decrease in savings.
These figures present a mixed message about the current and future state of our economy. Income growth is generally considered http://www.mainstreet.com/article/smart-spending/americans-boost-spending-heading-holidays the fuel for future spending, and with the exception of a small 0.1% decrease reported in September 2010, personal income has increased each month since July 2009.
The savings rate fell slightly to 5.8% in 2010, compared with 5.9% in 2009, as the Labor Department announced that jobless claims had spiked to 454,000 last week, the highest level claims have reached since October 2010.
Rising incomes might be good for the economy, but is it really okay for consumers to start spending again? MainStreet takes a look.
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