Americans' personal income rose 0.6 percent in November, while consumer spending moved ahead at an even faster pace, the Commerce Department reported yesterday.
The gain in personal income was the biggest since last April. Economists said the personal-income figures suggested consumer spending would continue moderately, but would not be enough to carry the economy as it has in the past.
"Spending power is continuing to go up at a moderate pace," said Robert Ortner, Commerce Department chief economist. "Between continuing growth in income and high levels of consumer confidence -- which undoubtedly have been bolstered strongly by bond and stock market actions -- the Christmas season may turn out to be somewhat better than feared."
Consumer spending rose 0.9 percent in November, reversing the 1.4 percent decline in October. October's drop -- the sharpest since spending plunged 1.4 percent in May 1960 -- had been blamed on the slump in automobile sales that followed the end of cut-rate financing in September.
November's savings rate fell to 4.2 percent from 4.5 percent in October, Commerce said. Income after taxes increased 0.5 percent in November, following a 0.5 percent increase in October.
Many economists said they don't expect a sharp rebound in consumer spending because consumer debt is at historically high levels and the savings rate has dropped recently.
Consumer spending is important because it accounts for about two-thirds of the nation's gross national product, which is the output of goods and services.
"Consumer spending isn't going to grow as fast as it did in the first three quarters of this year," Ortner said. Consumer spending in the fourth quarter may fall or rise "marginally at best" compared with growth of 4.8 percent in the first quarter, 2.6 percent in the second and 4.6 percent in the third, Ortner said.
Spending in the next two quarters will be slower than the average 4 percent rate during the first nine months of 1985, Ortner said.
Economists said other areas of the economy such as home building, defense spending and inventory rebuilding will have to offset the moderation of consumer spending to keep the economy growing.
The government reported last week that the economy appears to be growing at a 3.2 percent rate in the fourth quarter.
If left unrevised, that would mean the economy grew at a 2.4 percent pace this year, down from the Reagan administration's forecast of 4 percent growth.
"The economy can't grow over a long period of time without growth of consumer spending, but for a couple quarters it can," Ortner said.
According to Commerce, personal income increased $18.5 billion last month as personal spending rose $2.7 trillion. Purchases of durable goods -- products expected to last three years -- rose 2.1 percent following a 12 percent drop in October. Commerce attributed the increase to a pickup in car sales after a decline in October.