December's Personal Income Is Half Of Spending Rate

Jan. 13, 2005
By John S. McClenahen Economists at UBS Investment Research in New York expect household cash flow to increase during the next few months as people adjust their tax liabilities. "The extra cash will underpin consumer spending," they predict. That ...
ByJohn S. McClenahen Economists at UBS Investment Research in New York expect household cash flow to increase during the next few months as people adjust their tax liabilities. "The extra cash will underpin consumer spending," they predict. That clearly was not the case in December 2003. Personal income increased $18.8 billion, or 0.2%, while personal consumption expenditures during the final month of last year increased $35.3 billion, or 0.4%, the U.S. Commerce Department reported on Feb. 2. "We expect the resulting drop in the saving rate -- to 1.3% -- should be reversed in [the] January [data] when tax cuts and hiring bolster income growth," says UBS.

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