U.S. consumer spending fell 0.2% in December, though a 0.6% rise in household incomes could prime the economy for growth this year, the Wall Street Journal reported. Household spending fell for the second straight month, the Commerce Department said Friday. Consumers cut spending broadly on goods and services. Incomes, meanwhile, rose for the first time in three months, in part because of government aid programs, such as enhanced unemployment benefits, that kicked in at the end of the year. The increase in income has given households money to spend, but they have had limited ways to spend it. The savings rate rose to 13.7%, far higher than the pre-pandemic level. While government aid programs, a booming stock market and rising home values have put households on solid footing financially, consumers haven’t been able or willing to dine out, go to concerts or on vacation. Late last year, many state and local governments forced businesses to shut down again or scale back operations to combat another wave of the coronavirus. Many households are still suffering. The jobless rate of 6.7% in December is far higher than the February level of 3.5%. Many businesses have closed. But households collectively saved $1.4 trillion in the first nine months of last year, about twice as much as what they saved in the same period a year earlier, according to Berenberg Economics. Most received one-time cash payments of $1,200 last year as part of a broad federal package to help them weather the economic downturn. Millions of unemployed workers also received enhanced unemployment benefits—$600 a week at one point, on top of their normal jobless compensation.
