WASHINGTON — U.S. consumers kept their spending flat in December and instead boosted their savings rate to the highest level in three years.
Consumer spending was unchanged in December after rising 0.5 percent in November, the Commerce Department reported Monday. Incomes increased 0.3 percent, matching November's gain.
Higher incomes and flat spending pushed the savings rate to 5.5 percent of after-tax income in December. That was the highest level since December 2012.
The latest numbers underscore how cautious consumers were in the final three months of the year. Weak spending gains dragged overall U.S. economic growth, which slowed to a meager 0.7 percent rate in the fourth quarter.
"Spending momentum slowed as 2015 drew to a close and enters the year on a weaker note," said Jennifer Lee, senior economist at BMO Capital Markets.
But she noted that the big rise in personal savings could be setting the stage for stronger spending growth in 2016.
Economists also expect that an improving jobs market will fuel spending momentum and help push economic growth back above 2 percent in the current January-March quarter.
See Tuesday's Arkansas Democrat-Gazette for full details.