US consumer spending advanced solidly in December as personal income rose a record 3.7 per cent amid a big dividend payout by software giant Microsoft.
The Commerce Department said personal income rose 0.6 per cent in December when the impact of Microsoft's dividend payment was stripped out.
Consumer spending climbed 0.8 per cent in December and was up 0.9 per cent when factoring in a small drop in prices.
The department said the price index for consumer spending, a measure of inflation, fell 0.1 per cent and was unchanged when volatile food and energy prices were stripped out.
Wall Street economists had expected personal income to rise 3 per cent with spending up 0.9 per cent.
Since individuals are unlikely to pay taxes on the dividend until this year, the Microsoft payout also drove disposable income up sharply.
After-tax income rose by a record 4 per cent in December, the department said. When adjusted for inflation, the gain was 4.2 per cent - also a record.
The department estimated roughly three-quarters of a $32 billion dividend payment Microsoft made to shareholders in early December would count as personal income.
In its report today, it said that payment gave personal income a $24.8 billion boost.