US consumers held tight to their wallets in December, the key holiday shopping season, despite a rise in incomes, according to Commerce Department data released Thursday.
Household spending edged up 0.2 percent from November, only half the growth of the prior month and slightly below the consensus estimate of 0.3 percent.
Consumer spending, the main driver of the US economy, slowed in late 2012 amid the government’s looming fiscal cliff of automatic tax hikes and spending cuts set for January 1, which was partly avoided in a last-minute political deal.
Meanwhile, personal incomes rose for the eighth straight month in December, rising a much stronger-than-expected 2.6 percent from the prior month.
The income increase was boosted by accelerated payments of bonuses and other forms of “irregular” pay in anticipation of changes in individual income tax rates, as well as lump-sum payments of social security benefits, the department said.
In the partial fiscal cliff deal, political leaders allowed Bush-era payroll tax cuts on social security benefits to expire and lifted taxes in other areas.
With inflation weak in a tepid economy, the December price index for consumer spending was essentially flat, while so-called real disposable income — excluding price changes — rose 2.8 percent.
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