Growth in real disposable US personal incomes ground to a halt in December while real consumer spending rose a modest 0.2 per cent, the Commerce Department estimated.
The personal savings rate fell to 1.3 per cent from 1.5 per cent, the lowest in a year and half the rate seen in August.
Disposable personal incomes increased just 0.1 per cent in the fourth quarter after an 8.1 per cent gain in the third quarter, when tax cuts and tax rebate checks were implemented.
Consumers can expect another round of tax refunds when they file their 2003 taxes in the next few months, which should boost their incomes.
Real disposable income growth in November was revised lower from 0.5 per cent to 0.3 per cent. Real spending in November was revised higher from 0.5 per cent to 0.6 per cent.
The figures are adjusted for price changes and for seasonal factors. Inflation remained low in December, with the personal consumption expenditure index rising 0.2 per cent. The core PCE index
- which excludes food and energy costs - also rose 0.2 per cent.
Over the past year, the core PCE index is up just 0.7 per cent, the lowest inflation rate in more than 40 years.