WASHINGTON Jan 31 American incomes rose in
December by the most in eight years, a positive sign for
consumer spending that could help the economy sustain momentum
early this year.
Personal income for Americans rose 2.6 percent last month,
the Commerce Department said on Thursday. That was the biggest
increase since December 2004 and well above analysts'
expectations for a 0.8 percent gain.
Personal income rose in November and December, the Commerce
Department said, because of special dividends and accelerated
bonuses to beat increases in taxes this year.
The big rise in incomes suggests total consumer spending
power entered the new year on stronger footing, even though much
of the gains may not have been distributed evenly throughout the
The economy faces the threat of across-the-board spending
cuts scheduled for March, as well as the possibility the
government might default later this later year and trigger
After-tax income climbed 2.7 percent in December, the
strongest since May 2008, while consumer spending rose 0.2
percent, just below the pace expected by analysts in a Reuters
Excluding the one-time factors that boosted incomes in
December, after-tax income rose 0.4 percent.
Data on consumer spending over the full fourth quarter was
released on Wednesday and was one of the bright spots in a
report that showed the economy unexpectedly contracted during
A weak job market is causing the U.S. Federal Reserve to
keep interest rates at rock bottom levels for some time.
The Fed on Wednesday left in place its monthly $85 billion
bond-buying stimulus plan, arguing the support was needed to
lower unemployment even as it indicated a recent stall in U.S.
economic growth was probably temporary.
Thursday's report from the Commerce Department showed
cooling inflation, which also will support consumer spending
power. Prices rose 1.3 percent in the 12 months through
December, down a tenth from the reading in November.
A measure of underlying inflation that strips out food and
energy showed prices up 1.4 percent in the period, also down a
tenth from November.