Monday, January 30, 2012

Personal Income Rose 0.5% in December

Personal income grew by $61.3 billion, or 0.5%, in December according to a Bureau of Economic Analysis report released this morning. Consumer spending was unchanged, despite the growing personal income, prompting the savings rate to jump to 4.0%

Real income growth was 0.4% accounting for a 0.1% rise in prices. Both real and nominal income growth are at their fastest levels since March. Driving income growth were wages and transfer income, while interest income fell for the third straight month.

Spending growth appears to be moderating, with real consumption falling by 0.1% in December. In each of the previous two months consumption rose by 0.1%. Third quarter growth averaged 0.5%. A 0.2% growth in service spending was offset by a 0.4% growth in both durable and non-durable goods spending.

Inflation in consumer prices, as measured by the PCE deflator, has been mild in recent months. After two months of no price growth, December’s prices rose a modest 0.1%. Compared to one year ago, prices are up 2.4%, the slowest appreciation reported since April.

Read the report.

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