Personal income in the United States rose by 0.6 percent last month, but spending edged up by only 0.3 percent compared with a 1.1 percent jump in November, the Commerce Department reported yesterday.
For the entire year, personal income climbed 6.4 percent, the smallest advance in nearly two decades, the report said. After-tax incomes were up by 7.1 percent in 1982, enough to outpace inflation, but the 1.1 percent real increase was below the 2 1/2 percent rise in 1981, the department said.
The recession has cut into wages and salaries in the past year. During December, these rose by 0.2 percent, after no change the previous month, and for all of 1982 they climbed by just 4.4 percent, the lowest increase since 1961, the Commerce Department reported. Farm income plummeted 22.3 percent last year, while unemployment-insurance benefits rose 61.3 percent.
Manufacturing earnings--the hardest hit by the economic recession--fell again last month by $1 billion at a sesonally adjusted annual rate, the report said.
The weakness in consumer spending during December was partly due to a fall-off in auto sales after their rapid growth in November. It also reflected a much smaller increase in spending on services than in preceding months.
Commerce Department chief economist Robert Ortner commented that the spending increases in October and November "will give a relatively strong fourth quarter." The annual sales rate in the final quarter rose by as much as 10 percent over the third quarter, he said. This works out at about 4 3/4 to 5 percent, after accounting for inflation, he said.
For 1982 as a whole, consumer spending was up by 7 percent.
Wages and salaries climbed by just 4.4 percent last year, the lowest increase since 1961, the Commerce Department said.
Personal savings averaged 6 1/2 percent of after-tax personal income during 1982 compared with 6.4 percent in 1981, the report said.
Last month the savings rate edged up slightly, as spending rose by less than the 0.6 percent increase in after-tax income.