Consumer Spending in U.S. Rose More Than Estimated

Consumer spending in the U.S. rose more than forecast in December, capping its strongest quarter in more than four years.

Purchases, which account for about 70 percent of the economy, increased 0.7 percent after climbing 0.3 percent the prior month, Commerce Department figures showed today in Washington. Incomes increased for a third month, and the Federal Reserve’s preferred measure of inflation advanced at the slowest pace on record.

Households are driving demand at companies from Coach Inc. to Ford Motor Co. and bolstering the recovery. The economy needs even faster growth to reduce unemployment, which is projected to average more than 9 percent this year, one reason Fed policy makers are pushing ahead with a second round of monetary stimulus worth $600 billion.

“The consumer is doing OK, and household spending will continue to grow this year,” Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, said before the report. “We expect it to continue to play a part in this recovery.”

The median estimate of 67 economists surveyed by Bloomberg News called for a 0.5 percent advance in spending after a previously reported 0.4 percent gain in November. Projections ranged from increases of 0.2 percent to 0.8 percent.

Incomes climbed 0.4 percent for a second month, matching the median forecast in the Bloomberg survey.

Wages and salaries increased 0.3 percent after a 0.1 percent gain in November.