Americans splurged on their spending in December, powered by an accompanying rise in incomes, data from the Commerce Department’s Bureau of Economic Analysis showed on Friday, but there was also evidence that they saved less in the month.
Personal consumption expenditures, or PCE, went up by nearly $134 billion, a 0.7 percent increase, in December. Meanwhile, personal incomes also jumped by $60 billion but at a much slower pace of 0.3 percent.
People shop at a home improvement store in Brooklyn on January 25, 2024 in New York City. Economic data from the Commerce Department released today showed that American consumers are spending more and saving less. People shop at a home improvement store in Brooklyn on January 25, 2024 in New York City. Economic data from the Commerce Department released today showed that American consumers are spending more and saving less.Spencer Platt/Getty Images
The data suggested that consumers were making up the difference by dipping into their savings, which went down to $767 billion last month from November’s $850 billion. The personal savings rate—personal savings as a proportion of disposable income—fell to 3.7 percent, the lowest it’s been in a year.
“Stronger spending is being driven partly by falls in the saving rate, which is now at a 12-month low. A rebound in the saving rate is a downside risk to the outlook later this year,” Michael Pearce, lead U.S. economist at Oxford Economics, said in a note shared with Newsweek.
This is a developing story that will be updated with more information and context.
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