US consumer spending spikes in December as savings plunged to 12-year low

US indexes

American consumers spent solidly last December as the latest economic data showed that the consumer spending in the country reached its highest level in six years while savings dipped into its lowest level not seen in 12 years.

According to figures from the Commerce Department, consumer spending in the United States advanced by 0.4% last month to settle at 3.8% rate on an annual basis, which was the fastest pace since 2011.

Based on the data, the rise in consumer spending was mainly due to higher demands for goods and services as the holiday season steered Americans to loosen up their pockets. Data also showed that most purchases were devoted to vehicles such as cars and trucks.

Aside from big-ticket items, Americans used their budget mostly for eating out and for utility expenses such as oil and gas, which have recorded decent gains in the final month of the previous year.

The higher confidence level of Americans to spend more money provided a bright reflection that the US economy is on the right track to reclaim its glory days last saw before the previous recession.

Personal income also gave major support to the economy as it beaten analysts’ expectations of 0.3% after it accelerated by 0.4% in December for a 3.1% advancement on a yearly basis but the most worrying part of the latest economic figures was the savings that slipped to its lowest peak since September 2005.

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