US consumer spending expected to fall in December, while incomes rise slightly

Economic Indicators Associated Press

The Commerce Department reports on consumer spending and income in December. The report will be issued Monday at 8:30 a.m. Eastern.

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SPENDING UP: The expectation is that spending fell 0.3 percent in December as incomes rose 0.3 percent, according to a survey of economists by data firm FactSet. In November, spending rose 0.6 percent and incomes were up 0.4 percent.

HIGHER INCOMES, MORE SHOPPING: Despite the projections, multiple indicators show that Americans are growing more comfortable about the economy and are spending money again.

Consumer spending rose at an annual clip of 4.3 percent during the final three months of 2014, the strongest pace since early 2006, the government reported Friday. That surge should help to further propel overall economic growth, as roughly 70 percent of gross domestic product stems from consumer activity.

The University of Michigan reported that its consumer sentiment index stood at 98.1 percent in January, the highest reading since 2004. Half of the consumers surveyed expect the current expansion to continue for the next five years.

Similarly, incomes are rising at a slightly better pace. The Labor Department's employment cost index, which measures pay and benefits, climbed 2.2 percent in 2014, up from 2 percent the previous year. Despite the improvement, the index remains below its historical increase of 3.5 percent.

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Much of the ongoing momentum will depend on whether the economy continues to spawn jobs, and most believe that that will be the case.

Economists expect the U.S. to report Friday that employers added 230,000 jobs. If the forecast proves accurate, the economy will have gained at least 200,000 jobs in each of the past 12 months, the best streak since the 16 months of gains in excess of 200,000 between 1993 and 1994.