Consumer Spending Slows, Personal Income Up

U.S. consumer spending growth slowed a bit in January as auto sales fell, even though lighter taxes pushed disposable income up sharply, a government report showed on Monday.

Consumer spending rose 0.4 percent in January after a 0.5 percent gain a month earlier, the Commerce Department (search) said. Personal income edged up 0.2 percent, a bit slower than December's 0.3 percent rise.

Economists polled by Reuters had expected personal spending to rise 0.4 percent with income up 0.5 percent.

After adjusting for inflation, the rise in spending was a meager 0.1 percent, reflecting a 3.5 percent drop in purchases of big-ticket manufactured goods (search). The department said a fall off in automobile purchases was a big factor.

After-tax income shot up 0.8 percent in January — or 0.5 percent on an inflation-adjusted basis.

The department said the big increase in disposable income (search) reflected a number of special factors, including lower taxes. Excluding those factors, it said disposable income rose 0.1 percent.