Economic Watch: Consumer Spending, Manufacturing Drop; Construction Rises

The report is out.  Consumer spending during December posted its biggest drop since September 2009, according to a new U.S. Commerce Department report on Monday.  The 0.3% decline in personal consumption from the month before follows a downwardly revised 0.5% increase during November. The December drop was attributed mainly to lower gasoline prices and less auto sales plus indications consumers did more of their holiday shopping in November and October.  Despite the December drop, consumer spending in the final quarter of last year increased at an annual rate of 4.3%, the best pace since 2006. The same report showed a 0.3% increase in December from November in personal income while it posted a 3.9% increase in 2014 from the year before. Consumer spending also increased 3.9% last year from 2013’s level.  “A welcome improvement in wage growth at year end as a decline in prices boosted real take home income. Still, consumers appear to be somewhat fatigued in their spending patterns, pulling back noticeably at the end of the year despite lower gas prices,” said Sterne Agee Chief Economist Lindsey Piegza. “In the end, low gas prices will provide only a temporary boost while the key equation in terms of long-term success remains organic job and sustainable income growth.”     Click to continue reading.