U.S. consumer spending took a big tumble in December, possibly foreshadowing a slowdown in economic growth this quarter.
CFO reported that the Commerce Department reported Friday that spending fell 0.5% at the end of 2018 amid a sluggish holiday season. It was the biggest decline in nine years and followed gains of 0.7% in October and 0.6% in November.
Personal income dipped 0.1% in January, the first decline since November 2015, after jumping 1.0% in December. Consumer spending figures for January have been delayed by the government shutdown.
The December report confirmed economists’ expectations that the economy will slow down further in the first three months of the year. The Commerce Department reported Thursday that gross domestic product grew at a 2.6% in the fourth quarter after a 3.4% gain in the July-September period.
Consumer spending, a major component of GDP, increased at a 2.8% rate in the fourth quarter.
“Unless there is a big upward revision to the disastrous December retail sales figure, the weak end-of-quarter consumption profile provides for very challenging arithmetic for first-quarter consumption growth,” Michael Feroli, an economist at JPMorgan in New York, said.
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