U.S. Consumer Spending Shows Tepid Growth

Jan. 31, 2008
Weakest growth in 15 months

Demonstrating the weakest growth in 15 months, U.S. consumer spending rose 0.2% in Decmeber. Commerce Department data showed that incomes rose 0.5%.

Analysts said the data reflected a slowing economy and caution related to a deep housing slump and financial market turmoil. Nomura Securities economist David Resler said the accompanying downward revisions to both October and November spending suggest "the underlying trend in spending has downshifted considerably."

"Shoppers took a holiday from the malls in December," said Joel Naroff of Naroff Economic Advisers. "In other words, drop shopping not shop till you drop was the catch phrase."

Taking out inflation, "the details show real spending softer everywhere in December," said Ian Shepherdson of High Frequency Economics.

Over the full year 2007, incomes increased 6.2% and spending rose 5.5%.

An inflation gauge in the report showed consumer prices up a modest 0.2%, down from a 0.6% increase in November. Core prices, excluding food and energy costs, also increased 0.2% in the month.Over the 12 months to December, prices were up 3.5% and core prices rose 0.2%.

Real disposable income, adjusted for inflation, rose 0.2% in December, after a decline of the same amount in November.

Copyright Agence France-Presse, 2008

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