In yet another bullish sign for the economy, personal incomes rose 2.6% in December—the highest jump in eight years.
The increase was largely attributable to a jump in dividend income as corporations rushed to pay dividends before the end of the year and the then-looming fiscal cliff.
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The personal savings rate climbed to 6.5%, the largest since May of 2009. Consumption slowed in line with analysts’ expectations.
Economists are concerned that spending could slow down over the next few months because of the increase in payroll taxes and upcoming budget deadlines continuing economic uncertainty.
The Commerce Department noted the consumer price index (CPI) was up 1.3% year-over-year in December. The CPI is one of the Federal Reserve’s primary inflation indicators.
The weekly labor report showed unemployment claims rose by 38,000 to a seasonally adjusted 368,000 for the week ended January 26.
Economists view the 400,000 as the level to cross for the economy to show significant jobs improvement.
True to form for this time of the year, job market reports
have been volatile during the months of December and January due to holiday hiring and the resulting payroll changes.