Incomes Up Strong 0.5%, Consumer Spending Flat

Incomes up strong 0.5 percent, consumer spending flatWASHINGTON (AP) - Americans' incomes rose last month by the most in nine months, a hopeful sign for the economy after a year of weak wage gains. But consumer spending was flat.

Incomes rose 0.5 percent, the Commerce Department said Monday. It was the strongest increase since a similar gain in March.

Consumer spending was unchanged. That followed weak gains of 0.1 percent in both October and November.

The report underscored the challenge facing the economy in 2012. Unless incomes grow more rapidly, consumers will be forced to cut back further on spending. That would slow growth and result in less hiring.

After-tax incomes adjusted for inflation rose 0.3 percent in December. For the year, inflation-adjusted incomes rose 0.9 percent, just half the modest 1.8 percent rise in 2010.

The government reported Friday that the economy grew at an annual rate of 1.7 percent last year - roughly half the growth of 2010. It was the weakest showing since the economy contracted 3.5 percent in 2009.

Consumer spending for the year rose a modest 2.2 percent, only slightly higher than the 2 percent gain in 2010. But Americans dipped into their savings last year to finance some of the growth in spending last year.

Consumer spending is closely watched because it accounts for 70 percent of economic activity.

Unemployment stands at 8.5 percent - its lowest level in nearly three years after a sixth straight month of solid hiring.

For the final three months of 2011, Americans spent more on vehicles, and companies restocked their supplies at a robust pace.

Still, overall growth last quarter - and for all of last year - was slowed by the sharpest cuts in annual government spending in four decades. And many people are reluctant to spend more or buy homes, and many employers remain hesitant to hire, even though job growth has strengthened.

The outlook for 2012 is slightly better. The Federal Reserve has estimated economic growth of roughly 2.5 percent for the year, despite abundant risk factors: federal spending cuts, weak pay increases, cautious consumers and the risk of a European recession.

Economists say the big question going forward is whether incomes will gain enough strength to support stronger spending, thus helping the economy to grow at a faster rate. Many analysts believe the economy will continue to muddle along with low growth in 2012.

Nigel Gault, chief U.S. economist at IHS Global Insight, said he expected the overall economy would grow 2 percent this year, only slightly better than 2011 with consumer spending rising 2 percent as well.

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Mike

Worried that the Federal Reserve and the U.S. dollar ARE on the brink of collapse, more than a dozen states have proposed using their own alternative currencies of silver and gold. ---NEW YORK (CNNMoney) -- Lawmakers from 13 states, including Minnesota, Tennessee, Iowa, South Carolina and Georgia, are seeking approval from their state governments to either issue their own alternative currency or explore it as an option. Just three years ago, only three states had similar proposals in place.

"In the likely event of hyperinflation, depression, or the breakdown of the Federal Reserve, State's governmental finances and private economy will be thrown into chaos," said North Carolina Republican Representative Glen Bradley in a currency bill he introduced last year.

Unlike individual communities, which ARE allowed to create their own currency -- as long as it is easily distinguishable from U.S. dollars -- the Constitution bans states from printing their own paper money or issuing their own currency. But it ALLOWS the states to make "gold and silver Coin a Tender in Payment of Debts."

February 04 2012 at 2:50 PM Report abuse rate up rate down Reply
Mike

Cheap energy IS our economy and until it is cheap again their will be no growth just inflation which is not growth no matter how high the spending increases or how badly libtard Oboma kool aid drinkers want it to be. Oil IS the PRIMARY factor to world prosperity, cut and dry! Oil cost increase caused inflation along with massive fed res dollar printing caused inflation means hyper inflation and the end of the dollar.
Got gold?

January 31 2012 at 1:43 PM Report abuse +1 rate up rate down Reply
Mike

WOW aint we excited! Only 14 and 1/2 % lower that the real rate of inflation. Pardon me while I throw a libtard party! Got gold?

January 31 2012 at 1:42 PM Report abuse +1 rate up rate down Reply
johnskii

Oil prices are under $100/barrel once again. Where is the price drop at the gasoline pump? When oil prices go up gasoline prices immediately spike. If this is a fair and equal financial system gas prices should immediately dropwith the price of oil. Shouldn't they???

January 31 2012 at 12:16 PM Report abuse rate up rate down Reply
evanscheeselog

Obama is going to be a miserable old fart after Nov. 2, 2012. BYE BYE BARRY SOETORO !

Strong .05% MYAZZ !!!!

January 30 2012 at 12:54 PM Report abuse +4 rate up rate down Reply
Mike

WOW aint we excited! Only 14 and 1/2 % lower that the real rate of inflation. Pardon me while I throw a libtard party! Got gold?

January 30 2012 at 10:54 AM Report abuse -3 rate up rate down Reply
captmerit

depression

January 30 2012 at 10:21 AM Report abuse +1 rate up rate down Reply
gopispoison666

One more case of small but steady improvement in the overall economy.

Here's a great little blurb asking the nice Gopers in Congress to stop impoverishing American workers..

http://www.youtube.com/watch?feature=player_embedded&v=RQ_Q-IkCTWM

January 30 2012 at 10:17 AM Report abuse rate up rate down Reply
1 reply to gopispoison666's comment
cpo1514

Hello gopher.... ever think what this country would be with a leader instead of the Occupant in the White House. Maybe the Occupant should take a few courses in Economics and Business.... he has passed the Socialists classes.

January 30 2012 at 11:56 AM Report abuse -1 rate up rate down Reply
1 reply to cpo1514's comment
evanscheeselog

Damn it I knew Obama was in the GOP

January 30 2012 at 12:52 PM Report abuse +2 rate up rate down
evanscheeselog

Save your extra money America each one of us owes the federal government 48,000 dollars to pay back America's debt.

January 30 2012 at 10:03 AM Report abuse +2 rate up rate down Reply
evanscheeselog

I can't believe anything the Associated Press writes and all this to fluff Obama's testicles. I don't believe a word of this tripe ! The extra consumer spending came from CHRISTMAS ! People can't be this gullible.

January 30 2012 at 9:38 AM Report abuse -2 rate up rate down Reply
1 reply to evanscheeselog's comment
cpo1514

evans... but then the uneducated that were led by the uninformed did after all vote this poster boy for Socialism into the office... goes to show the Obama sheep are willing to be led.... and are not to bright

January 30 2012 at 11:54 AM Report abuse rate up rate down Reply
1 reply to cpo1514's comment
evanscheeselog

Correct lib sheeples are not "TOO" bright.

January 30 2012 at 12:50 PM Report abuse +3 rate up rate down