By: Daryl Tolliver
Fewer consumers made discretionary purchases in December, and instead turned their attention to their savings accounts, new government data shows.
According to the Personal Income and Outlays report issued by the Department of Commerce, personal incomes rose 0.5 percent to $13.1 trillion in December from November, the increase due in large part to rising salaries and wages. In addition, consumer spending declined 0.1 percent during the same time period, as more consumers placed their earnings into savings. The savings rate rose 4 percent during this period, constituting the highest monthly increase since April 2010.
"Today's data show personal income continued to rise at the end of 2011 - in particular, wages and salaries gained strength," said U.S. Commerce Department chief economist Mark Doms. "December income exceeded private-sector expectations and the data are further evidence of continued economic growth. We anticipate the Administration's continued focus on job creation will drive growth in personal income and consumer confidence and help to further strengthen the U.S. economy in 2012."
Falling in line with the positive sentiment expressed by the Commerce Department, analysts have given confident reviews as to the perceived decline in consumer spending behavior. Credit Suisse economist Jonathan Basile told Bloomberg that padded household savings represent the future of consumer spending in the U.S.
In addition, increases in seasonal spending remain consistent in the U.S., especially as more lenders and retailers offer consumers the chance to save money with lucrative rewards programs. A study from the National Retail Federation reveals Black Friday Spending in 2011 increased to $52.4 billion from 2010, a 16 percent spike. A separate NRF poll projects holiday spending for 2012 Valentine's Day will increase 8.5 percent from 2011.