INSTANT VIEW: Consumer spending falls again

NEW YORK (Reuters) - U.S. consumers cut spending for a sixth straight month in December and their incomes shrank, according to a government report on Monday that underscored the rapid deterioration in the economy.

KEY POINTS: * The Commerce Department said spending decreased by 1.0 percent after falling by a revised 0.8 percent in November. * That figure was previously reported as a 0.6 percent drop. * Incomes fell by 0.2 percent after November's 0.4 percent decline, previously reported as a 0.2 percent decline. * Analysts polled by Reuters had forecast spending falling by 0.9 percent and incomes slipping 0.4 percent. * For the whole of 2008, spending rose 3.6 percent, the smallest increase since 1961. * Incomes increased 3.7 percent, the smallest advance since 2003.

COMMENTS:

OMER ESINER, SENIOR MARKET ANALYST, RUESCH INTERNATIONAL, WASHINGTON:

"Consumption continues to slide while wages are holding up reasonably well. The FX market was generally unmoved by the data. I think it's also notable that the core PCE has fallen once again well below the Fed's comfort zone, which should potentially fan fears of deflation. It certainly suggests that the Fed will remain in an ultra-easy mode in the foreseeable future. On balance, the sharp decline in consumption, the largest component of the U.S. economy, suggests that the U.S. and the global economy are biased significantly lower."

PIERRE ELLIS, SENIOR GLOBAL ECONOMIST, DECISION ECONOMICS, NEW YORK:

"It's broadly in line and it's largely reflected in the Q4 GDP data. You are starting off in a weak position in the first quarter. You've also seen a big rise in savings which is good news in the long run because it means the adjustment is happening faster than expected. Once it reaches a certain level, you will see less of a drag on GDP.

"Car sales will be most impacted by the rise in savings rate.

"You are seeing a rapid slowdown in the core PCE which raises the possibility of prices falling below the Fed's comfort zone. It will not happen soon and it may be brief. But a sharp deceleration will make anybody nervous."

SCOTT BROWN, CHIEF ECONOMIST, RAYMOND JAMES & ASSOCIATES, ST PETERSBURG, FLORIDA:

"The numbers are pretty close to expectations. I would note the increase in the savings rate. This gets into the idea that if people start saving more they will be spending less, so the downturn will be more severe and long lasting."

MARKET REACTION: STOCKS: U.S. equity index futures add to losses after personal income, spending data. BONDS: U.S. Treasury debt prices extend gains. DOLLAR: U.S. dollar trims losses versus the euro.