Personal incomes in the US fell for the first time in more than three years in January and consumer spending fell by the most in nearly a decade. Personal income slipped in January by 0.1 percent, the first decline since November 2015.
The Commerce Department reported that consumer spending, which makes up more than two-thirds of the US economy, dropped half a percent in December. That was the biggest decline in almost a decade, since September 2009.
The sharp decline in consumer spending in December puts consumption on a lower trajectory in the first quarter and bolsters expectations that the economy is slowing down and will likely continue to slow down in the first three months of this year.
Many analysts suspect that despite the drop, consumer spending likely remains supported by an accumulation of savings. In December, savings increased to $1.2 trillion, the highest level since December 2012. The saving rate jumped to a three-year high of 7.6 percent.
When adjusted for inflation, consumer spending fell 0.6 percent in December, still the largest drop since September 2009.