Real personal disposable incomes accelerated at a 0.4% pace in December, four times the pace of inflation-adjusted spending during the month. The saving rate, which represents a sign of consumer conservatism, rose to 5.5% in December, the strongest pace since we faced the “Fiscal Cliff” in 2012. Revisions to the data for October and November were offsetting; overall consumer spending came in slightly shy of initial estimates of 2.2% in the fourth quarter but the change was not enough to revise overall GDP estimates for the quarter.
On the surface, it would appear that consumers are saving instead of spending the money they are accruing at the gas pump. The composition of spending gains in the fourth quarter, however, suggests something very different.