US income, spending gain slow in 2019

WASHINGTON (AFP) – United States (US) consumer spending and incomes rose but at a slower pace in 2019 compared to the previous year, according to government data released on Friday.

Personal consumption expenditures rose 0.3 per cent last month, slightly slower than the prior month, but personal income gained just 0.2 per cent, the Commerce Department reported.

And both measures posted much slower increases than in 2018, with income up 4.5 per cent in the year and expenditures rising 4.0 per cent, according to the report.

“Consumer spending has shielded the economy from global headwinds for most of 2019 but some signs of cracks in the consumer’s armor have appeared,” analysts at Oxford Economics said in a commentary on the data.

Meanwhile, the report confirmed that price increases remained tepid last year, reflected by a closely-watched measure of US inflation which rose just 1.6 per cent in December compared to 2018.

Though that inflation rate was the highest annual pace in a year, it remains well below the Federal Reserve’s 2.0 per cent target.

Persistently low inflation continues to worry and baffle central bankers, especially at a time when the economy continues to expand and unemployment is at historic lows, which should result in rising wages and increased price pressures.