Originally posted by the Voice of America.
Voice of America content is produced by the Voice of America,
a United States federal government-sponsored entity, and is in
the public domain.


US Consumer Spending Up 0.5 Percent in December

by Associated Press

   WASHINGTON --

   Consumers boosted spending in December at the fastest pace in three
   months, giving the economy some momentum going into 2017.
   Consumer spending advanced 0.5 percent in December, a major improvement
   over the modest 0.2 percent gain in November, the Commerce Department
   reported Monday. It was the best showing since spending jumped 0.7
   percent in September. The increase was driven by a 1.4 percent surge in
   spending on durable goods, long-lasting items such as autos.
   Incomes also showed some improvement, rising by 0.3 percent in
   December, spurred by a rebound in growth in wages and salaries.
   Consumer spending is closely watched since it accounts for 70 percent
   of economic activity. Overall growth had slowed to a
   weaker-than-expected 1.9 percent gain in the October-December quarter
   because of a slump in exports. But economists are looking for a rebound
   in the current quarter.
   A key measure of inflation closely watched by the Federal Reserve edged
   up 0.2 percent in December and over the past 12 months has risen 1.6
   percent. That is the largest 12-month gain in more than two years. But
   it is still below the Fed's target of 2 percent annual increases in
   inflation.
   The central bank last month boosted its key interest rate by a
   quarter-point to a still-low range of 0.5 percent to 0.75 percent but
   projected that it could raise rates by three times this year as
   inflation rises further.
   The 0.3 percent rise in incomes reflected a 0.4 percent gain in the key
   category of wages and salaries. Wages and salaries had actually fallen
   0.1 percent in November.
   With spending outpacing income growth in December, the saving rate
   dropped to 5.4 percent of after-tax incomes, down from 5.6 percent in
   November. It was the lowest saving rate since March 2015.
   Economists believe that consumer spending will show solid gains in
   2017, reflecting strong labor markets with unemployment down to near a
   nine-year low of 4.7 percent in December.