Consumer Spending Slows, Personal Income Up
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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.
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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.