Consumer Spending Posts Biggest Drop Since 2009

MarketWatch Pulse

Americans cut spending in December by the largest amount since 2009, buying fewer cars and trucks and devoting less money to energy amid a deep plunge in oil prices. Yet incomes posted another solid again and falling inflation is allowing Americans to get more bang for their buck. Personal spending fell a seasonally adjusted 0.3% last month. Personal income, meanwhile, rose 0.3%. Both figures matched the estimate of economists polled by MarketWatch. Since income growth outpaced spending, the amount of money individuals save jumped to 4.9% from 4.3% to mark the highest level since midsummer. Meanwhile, inflation as gauged by the PCE price index slipped 0.2% in December. And the core rate that excludes food and energy was unchanged. The PCE index has risen a scant 0.7% in the past 12 months and it could decline a bit further because of sharply lower energy costs. The core rate has increased just 1.3% in the same 12-month span, well below the central bank's 2% target.

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