U.S. Spending Increase 0.5%

Dec. 22, 2006
Consumers are willing to spend.

Outpacing a 0.3% gain in income, U.S. consumer spending rose 0.5% in November, the Commerce Department reported Dec. 22. The increases were below Wall Street forecasts for a 0.6 % increase in spending and 0.4% for personal income.

Still, the November rise in spending was the biggest since July, and suggested consumers continue to open their wallets despite a slumping real estate market.

Adjusted for inflation, real spending rose 0.5% in November for the second consecutive month. Real disposable incomes, which are inflation-adjusted and measure income after taxes, went up 0.3% in November after rising 0.4% in October.

The spending pace meant the savings rate was a negative 1% in November, with Americans buying on credit or dipping into savings.

The personal consumption expenditures price index -- the Federal Reserve's favored inflation gauge -- was flat in November after a 0.2% drop in October. In the past year, the PCE price index has risen 1.9%.

Core inflation, which excludes food and energy, was also unchanged in the month and is the slowest pace since October 2002.

Copyright Agence France-Presse, 2006

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