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.
The Commerce Department (search) said personal income (search) rose 0.6 percent in December when the impact of Microsoft's dividend payment was stripped out.
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.
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