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US consumer spending fell sharp 0.5 per cent in December
WASHINGTON — U.S. consumer spending tumbled 0.5 per cent in December, the biggest decline in nine years, as the holiday shopping season ended in disappointment. Meanwhile, incomes rose sharply in December but edged down in January.
The fall in consumer spending followed sizable gains of 0.7 per cent in October and 0.6 per cent in November, the Commerce Department reported Friday. December’s result means that spending for the quarter decelerated significantly, a primary factor in the slowing of overall economy in the final three months of the year. Gross domestic product recorded a growth rate of 2.6 per cent after a 3.4 per cent gain in the third quarter.
Incomes jumped 1 per cent in December, though slipped 0.1 per cent in January. The government did not release spending data for January because of delays stemming from the government shutdown.
The big fall in spending reflected sizable declines in purchases of durable goods such as autos, as well as nondurable goods such as clothing during the all-important holiday shopping season. The result shows that consumer spending, which accounts for 70 per cent of economic growth, was showing significant weakness heading into the current quarter.