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Incomes and Spending Up in January

Personal incomes grew 0.4% in January, the Commerce Department reported, which partly reflected cost-of-living adjustments provided to millions of Social Security recipients. The increase followed two straight months of declines. Meanwhile, consumer spending grew 0.6% in January, which was higher than what analysts expected. The gain in spending followed six straight months of declines and was helped by increased purchases of food and other non-durables. In addition, the personal savings rate shot up to 5% from 3.9% in December, the highest level since 1995, the government reported, as consumers continued to shore up savings amid the deepening recession. The government calculates the savings rate as a percentage of after-tax incomes. So, while overall incomes rose 0.4%, after-tax incomes jumped 1.7%, providing more money for savings.

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Date Last Updated: 03/04/2009