WASHINGTON – U.S. consumer spending advanced solidly in December as personal income shot up a record 3.7 percent on a big dividend payout by software giant Microsoft Corp. (MSFT), a government report showed on Monday.
Consumer spending (search) climbed 0.8 percent in December and was up 0.9 percent when factoring in a small drop in prices. The department said the price index for consumer spending, a measure of inflation, declined 0.1 percent and was unchanged when volatile food and energy prices were stripped out.
Wall Street economists had expected personal income to rise 3 percent with spending up 0.9 percent.
Since individuals are unlikely to pay taxes on the dividend until this year, the Microsoft payout also drove disposable income up sharply. After-tax income rose by a record 4 percent in December, the department said. When adjusted for inflation, the gain was 4.2 percent, also a record.
The department estimated roughly three-quarters of a $32 billion dividend payment Microsoft made to shareholders in early December would count as personal income. In its report on Monday, it said that payment gave personal income a $24.8 billion boost.