US Personal Spending: Consumer demand was strong in December  - Wells Fargo

Analysts from Wells Fargo, consider that Personal Spending ended last year on a high note while they see that inflation is starting to take a bite from income and spending. 

Key Quotes: 

“After many years without inflationary pressures, it is clear today that inflation is rearing its ugly face once again. Although these levels of inflation are still very low compared to the pre-Great Recession period, American consumers benefited considerably by the increased purchasing power of low inflation. Today, that process is coming to an end, mostly due to the partial recovery in oil prices.”

“Nominal personal income increased 0.3 percent in December after a 0.1 percent print the previous month, while nominal disposable personal income increased 0.3 percent. However, real disposable personal income increased 0.1 percent after remaining flat in November.”

“In total, personal consumption expenditures increased 0.5 percent during the last month of the year in nominal terms and by 0.3 percent in real terms. Since income is not increasing as strongly as consumption, Americans have been bringing down the rate of saving. That is, the saving rate dropped to 5.4 percent in December from a rate of 5.6 percent in November and 5.7 percent in October. The rate of saving was 6.0 percent in August 2016.”