WASHINGTON (Reuters) – US personal income fell in January for the first time in over three years, as dividends and interest payments declined. This points to moderate growth in consumer spending, having fallen the most since December in December.
FILE PHOTO: A customer pays her lunch bill at the Other Side Cafe in Boston, Massachusetts, in this file photo taken on October 1, 2009. REUTERS / Jessica Rinaldi / Files
Friday's Commerce Department's Report Inflationary pressures remained tame, coupled with the weakening of domestic and global economic growth, the US Federal Reserve's "patient" stance for a further hike in interest rates Gave more credibility to the year.
Personal income fell 0.1% in January, its first decline since November 2015, after a 1.0% increase in December. Income was impacted by the reduction in dividends, farmers and interest income. Wages rose slightly by 0.3 percent in January, after rising 0.5 percent in December.
Economists surveyed by Reuters had forecasted an income of 0.3 percent for January.
The Commerce Department did not publish the January Consumption Share of the report, as the collection and processing of retail data was delayed by a 35-day government shutdown that ended on January 25.
It reported that consumer spending, which accounts for more than two-thirds of US activity, declined 0.5 percent in December. This was the largest decline since September 2009, rising 0.6 percent in November.
Households reduced purchases of motor vehicles and recreational items in December, leading to a 1.9 percent drop in merchandise spending. Expenditure on goods increased by 1.0 percent in November. Expenditure on services increased by 0.1 percent. This was due to lower spending on household electricity and gas. Service spending rose 0.4% in November.
Adjusted for inflation, consumer spending fell 0.6 percent in December, the largest drop since September 2009, after rising 0.5 percent in November.
Data for December were included in Thursday's Fourth Quarter Gross Domestic Product (GDP) report, in which consumer spending grew 2.8 percent a year, slower than the robust pace of 3, 5 percent in the third quarter. The economy grew 2.6 percent in the October-December quarter, up 3.4 percent in the third quarter.
US. The financial markets were little moved by the data.
The strong weakening of consumer spending in December means that consumption in the first quarter is on a lower growth path and analysts support the expectation that the economy will continue to weaken in the first three months of the year becomes.
Consumer spending is likely to continue to be supported by an accumulation of savings. In December, savings rose to $ 1.2 trillion, the highest level since December 2012 of $ 961.3 billion in November. The savings rate rose to a three-year high of 7.6 percent.
The economy is slowing as the $ 1.5 trillion increase in tax cuts and the rise in government spending are easing.
A trade war between the United States and China, higher Interest rates, slowing global growth and uncertainty about Britain's exit from the European Union are also having a negative impact on the economy.
Inflation was benign in December. The personal consumption price (PCE) index excluding the volatile food and energy components rose 0.2 percent after a similar rise in November. As a result, the so-called core PCE price index rose by 1.9 percent compared to the previous year.
The PCE core index is the preferred inflation measure of the Fed. For the first time since April 2012, it reached the US Federal Reserve's inflation target of 2 percent.
coverage by Lucia Mutikani; Editing by Andrea Ricci