Americans Aren't Making More, but They're Spending More
Americans aren't making any more money, but they're spending more, according to a December Personal Income and Outlays report (link opens as PDF) released today by the Commerce Department.
Investors watch income and spending habits to gauge consumer sentiment. Income serves as a leading indicator of spending, while spending rates help investors understand the sustainability of consumption-based growth.
After advancing 0.2% for November, personal income stayed steady last month. Analyst estimates had called for another 0.2% gain, however The Wall Street Journal noted that income's disappointing results may be partially due to weather.
For the same period, personal spending increased 0.4% on top of November's revised 0.6% boost. Analyst predictions proved overly conservative, having expected a smaller 0.2% bump. Even accounting for price increases, real spending saw a 0.2% rise for December.
In a potential sign of longer-term economic pessimism, durable goods spending dropped off 1.8%, erasing November's 1.8% gain. Nondurable goods added to their 0.2% November bump with a 1.5% December increase.
Looking back over the past 12 months, personal income is down 0.8% comparing December 2013 to December 2012, while December personal spending has advanced 3.6%.
The article Americans Aren't Making More, but They're Spending More originally appeared on Fool.com.
Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.