Consumer spending hits 6-year high — as Americans cut savings to 12-year low

• January 29, 2018
• realestatelife
• Announcements, Business & Markets, Real Estate, Real Estate Finance, Your Real Estate Life

Consumer spending climbed 0.4% in December, capping off the biggest increase in household buying since 2011.

Economists had forecast a 0.5% increase.  Americans were able to spend more last year partly because of rising incomes. They rose 0.4% in December and advanced 3.1% for the full year, the largest increase since 2015.

Yet households drew even more heavily on their savings to fund their purchases. The savings rate fell to 2.4%, the lowest level since 2005.

The PCE index, the Federal Reserve’s preferred inflation gauge, edged up 0.1% in December. The closely followed “core” rate that strips out food and energy rose 0.2%.

The rate of inflation over the past year slipped to 1.7% from 1.8%, however. The core rate was flat at 1.5%.