Consumer Spending Tops Income Growth

Consumer spending shot ahead at the fastest clip in nearly two years in November, but analysts contend consumption will slow this year because of weak income growth and large debt accumulations.

Indeed, surveys by government agencies and private organizations suggest that consumption already slowed as evidenced by lackluster holiday spending dependent in large part on sales incentives.

On Tuesday, the Commerce Department reported personal incomes grew just 0.2 percent in November, meaning Americans had to dip into savings to finance the buying spree that boosted spending 0.9 percent that month.

The Commerce report showed that personal incomes increased $11.5 billion in November at an annual rate, the slowest growth since August when incomes were flat.

At the same time, spending increased at a $45.7 billion rate in November, the biggest gain since a 1.5 percent advance in February 1994.