U.S. personal incomes rose more than expected in December and consumer spending rose for the third consecutive month but at a slower pace as households chose to save extra cash, lifting savings to a six-month high, according to a government report released Monday. The Commerce Department said personal income rose by 0.4 percent last month, the sixth consecutive monthly increase. However, much of the increase was attributed to a one-time Social Security pension payment. Wages and salaries rose by only 0.1 percent after rising 0.4 percent in November. Consumer spending rose a smaller-than-expected 0.2 percent in December following a 0.7 percent increase the previous month. For all of 2009, spending fell 0.4 percent, the biggest decline since 1938. Consumer spending is closely watched because it accounts for two-thirds of total U.S. economic activity. In the fourth quarter of 2009, consumer spending rose 2 percent, down from a 2.8 percent increase in the July-September quarter. The increase helped gross domestic product (GDP) to rise by 5.7 percent in the fourth quarter-the fastest growth in six years-but a 10 percent unemployment rate is pressuring households. The savings rate rose to 4.8 percent last month from 4.5 percent in November. For all of 2009, savings rose to a record $502.7 billion. Department data also showed the personal consumption expenditures price index, excluding energy and food, rising 1.5 percent from a year ago in December. The index, which is a key inflation measure monitored by the U.S. Federal Reserve (Fed), increased 1.4 percent in November.
