Consumer spending softened unexpectedly in December:
The Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, fell 0.3 percent after gaining 0.5 percent in November and 0.3 percent in October.
The drop, the largest since September 2009, reflected a decline in spending at service stations as gasoline prices fell, as well as weak auto receipts and weather-related softness in demand for utilities.
The spending data was included in Friday’s fourth-quarter gross domestic product report, which showed the economy growing at a 2.6 percent annual pace, with consumer spending rising at a brisk 4.3 percent rate – the fastest since 2006.
The good news is that at least some of that decline can be attributed to consumers using some of those gas pump savings to paying down debts — that ought to free up finances for future spending, or better yet, for future investing.
But then there’s this:
Business spending on equipment in the fourth quarter was the weakest since mid-2009.
Consumer spending tells the story of how consumers feel right now, but business spending tells the story of what’s to come.