US personal spending in December inched up 0.2 per cent, slightly more than expected but for the entire year spending grew by the weakest amount since 2003, a government report today showed.
When adjusted for inflation, spending was unchanged, the Commerce Department report showed, as consumers were socked with surging energy and food costs.
This data was incorporated into a report yesterday that showed the economy nearly stalled in the fourth quarter, advancing by just 0.6 per cent to close out the weakest year of growth in five years.
Economists polled ahead of the Commerce Department report were expecting personal spending to advance by just 0.1 per cent as consumers were in the headwinds of a weakening economy hit hard by plummeting home values and tighter lending.
Prices for US Treasury bonds rose, but that was in reaction to a separate labor department report showing the bigger-than-expected surge in new applications for jobless benefits that brought the level to its highest in more than two years.
For all of 2007, consumer spending grew by 5.5 per cent, the weakest growth since a 4.8 per cent increase in 2003. Personal income in December rose 0.5 per cent. That was slightly higher than the 0.4 per cent increase economists were expecting.
Meanwhile, the personal consumption expenditure price index, a key measure of inflation rose 0.2 per cent. But this year-one-year index excluding food and energy prices, a favorite inflation gauge of the Federal Reserve, rose 2.2 per cent, a sign that inflation is persisting even while the economy slows.