Consumer Spending Flat in December, Adding to Depressed GDP Outlook

Consumer spending was flat in December, adding to the latest indicator that U.S. economic growth in the fourth quarter cooled and continues to do so. Economists polled by Reuters had forecast consumer spending rising 0.1% last month.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was weighed down on households cutting back on purchases of automobiles and spending on utilities. Further, a jump in savings to a three-year high suggested there is enough muscle to boost consumption in the months ahead.

The Commerce Department said on Monday the unchanged reading in consumer spending followed an upwardly revised 0.5 percent increase in November. When adjusted for inflation, consumer spending edged up 0.1 percent after a 0.4 percent gain in November. Throughout 2015, consumer spending increased 3.4% after gaining 4.2% in 2014.

Wages and salaries ticked up 0.2% after jumping 0.5% in November. Income in 2015 increased 4.5%, the largest increase since 2012, after rising 4.4 percent in 2014.

But savings boomed to $753.3 billion in December, which is the highest level since December 2012, up from $717.8 billion in November.