Incomes Fail to Keep up With Spending in November

Personal incomes rose 0.4% in November, although they couldn't keep up with the 1.1% jump in consumer spending as consumers headed to the malls to start their holiday shopping. Incomes were double the October gain of 0.2%. The jump in spending was the biggest since a 1.2% surge in May 2004. With spending rising at a faster rate than savings, the nation's savings rate was a negative 0.5%. That means households spent all of their incomes and either dipped into savings or borrowed to finance their spending needs. In addition, an inflation gauge tied to spending showed a 0.6% increase in November, the government reported, the biggest jump in more than two years. The gain reflected November's big surge in gasoline prices. Excluding energy and food, prices were up 0.2%. Core inflation is up 2.2% over the past 12 months, above the upper range of the Federal Reserve's comfort zone of 1% to 2%.

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