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US personal income declined for the first time in more than three years in January due to lower dividends and interest payments, suggesting moderate growth in consumer spending after posting the strongest down since 2009 in December.
The Commerce Department announced Friday that its personal income fell by 0.1% in January. This was the first decline since November 2015, following a jump of 1.0% in December.
Revenues were weighed by lower dividends, farm owners' income and interest. Wages rose 0.3% in January after rising 0.5% in December.
Economists polled by Reuters had forecast revenue up 0.3% in January. The Commerce Department did not publish the January portion of the report on consumer spending, as data collection and processing was delayed by a partial 35-day government closure that ended on January 25. .
Consumer spending, which accounts for more than two-thirds of US economic activity, fell by 0.5% in December. This is the largest decrease since September 2009 and follows a 0.6% increase in November.
Households reduced their purchases of motor vehicles and recreational goods in December, resulting in a 1.9% drop in spending on goods. Spending on services edged up 0.1%, dampened by lower spending on electricity and gas.
After adjusting for inflation, consumer spending fell 0.6% in December, also the largest decline since September 2009, following a 0.5% gain in November.
The data was included in the fourth quarter gross domestic product report released on Thursday, which showed that consumer spending had increased at an annualized rate of 2.8% over this period, a slowdown from the robust pace of growth. 3.5% of the third quarter. The economy grew 2.6% in the quarters from October to December, after a 3.4% pace in the third quarter.
The sharp deceleration in consumer spending in December led to a weaker growth trajectory in the first quarter and reinforced analysts' expectations of the slowdown in the economy during the first three months of the year. .
Inflation remained moderate in December. The price index of personal consumption expenditure, excluding unstable components of food and energy products, rose 0.2% after a similar gain in November.
This left the year-on-year increase of 1.9% in the so-called CPI base price index. The basic PCE index is the measure of inflation favored by the Federal Reserve. It reached the 2% inflation target of the US central bank in March for the first time since April 2012.
Moderate inflation and slowing domestic and global economic growth reinforce the Fed's "patient" attitude in favor of a further rise in interest rates this year.
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