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Americans boosted spending in January but growth of their income was weaker than the rate of inflation. The savings rate also fell.
US personal spending rose by 0.5% compared with the prior month, while personal income increased by 0.1%, the Commerce Department said today. The personal consumption expenditures price index, a key inflation measure, rose 0.2% in January compared to December.
Personal income increased 0.1% in January 2010 after increasing 0.3% in December. Wages and salaries, the largest component of personal income, increased 0.4% in January after increasing 0.1% in December while real disposable personal income (DPI), income adjusted for inflation and taxes, fell 0.6% in January, after rising 0.2% in December. The January decline reflected higher non-withheld taxes.
Real consumer spending, spending adjusted for price changes, increased 0.3% in January, after increasing 0.1% in December. PCE (personal consumption expenditures) prices rose 0.2% in January. Excluding food and energy, prices were virtually unchanged in January.
Personal saving rate
Personal saving as a percent of disposable personal income was 3.3% in January, as outlays rose and disposable personal income declined.
The savings rate was 4.2% in January up from below zero in mid-2005.
Personal income rose less than expected, up 0.3%, and personal spending rose 0.5%. CNBC's Rick Santelli shares his analysis:
