US consumer spending rose solidly in December as demand for goods and services increased, but the gain came at the expense of savings, which dropped to a 10-year low in a troubling sign for future consumption and economic growth. Rising household wealth due to record gains on the US stock market as well as higher home prices likely made Americans more confident to dip into their savings to fund purchases, economists said. Savings are now at levels last seen in December 2007, when the economy slipped into recession. "It is true that the gains in consumer confidence as ...
US consumer spending rises to 0.4% in Dec; savings drop to 10-year low
The impact of low savings on consumer spending could, however, be temporarily offset by income tax cuts which went into effect in January
Us Consumer Spending