WASHINGTON – U.S. consumers increased their spending at a slower pace in December, while their income grew by the largest amount in eight years. Income surged because companies rushed to pay dividends before income taxes increased on high-earners.
The Commerce Department says consumer spending rose 0.2 percent last month, down from a 0.4 percent increase in November.
Income jumped 2.6 percent in December from November. Companies accelerated dividend payments to beat the January rise in income tax rates. It was the biggest gain since December 2004.
Consumer spending, which accounts for about 70 percent of economic activity, is expected to slow this year because Social Security taxes increased, leaving Americans with less take-home pay.