Households have so far used much of the extra income from cheap gasoline to pay down debt and boost savings which in December rose to 4.9 percent from 4.3 percent in the previous month. Also, consumers, did most of their holiday shopping in October and November lured to the strores by early prmotions. Even with the decline reported in December, in the last quarter of 2014, the consumer spending jumped the most in almost nine years.
The decline, which was more than the 0.2 percent forecast by economists, came as personal incomes increased by 0.3 percent to $41.3 billion and disposable personal income (DPI) grew by 0.3 percent to $35.8 billion. In November, personal income increased $47.2 billion, or 0.3 percent, DPI increased $34.2 billion, or 0.3 percent, and PCE increased $58.8 billion, or 0.5 percent, based on revised estimates.
Real DPI increased 0.5 percent in December, compared with an increase of 0.4 percent in November. Real PCE decreased 0.1 percent, in contrast to an increase of 0.7 percent. The price index for PCE decreased 0.2 percent in December, the same decrease as in November.
Wages and salaries increased $6.9 billion in December, compared with an increase of $42.2 billion in November. Private wages and salaries increased $4.9 billion, compared with an increase of $40.6 billion. Government wages and salaries increased $1.9 billion, compared with an increase of $1.7 billion.