(CN) — Consumer spending rose a solid 0.4 percent in December, down from a more pronounced surge in spending a month earlier, the Commerce Department said Monday.
According to the government, spending on new vehicles led the outlay for goods while spending on gas and electricity led the increase in expenditures in the services.
Monday’s report said December’s uptick in spending came after a relative torrid 0.8 percent increase in November.
Consumer spending is closely watched because it accounts for 70 percent of economic activity. Strong spending helped support overall economic growth of 2.6 percent in the fourth quarter, and helping to spur that was a 0.4 percent rise in incomes.
Monday’s spending report showed that the saving rate slipped to 2.4 percent of after-tax income in December, the lowest point in more than a decade, since a 2.3 percent rate in September 2005.
The economy grew at a 2.3 percent rate for all of 2017, a significant rebound from 1.5 percent in 2016.