American spending, income shrink amid recession

Agence France-Presse

Posted at Feb 02 2009 11:06 PM | Updated as of Feb 03 2009 07:06 AM

WASHINGTON - US consumer spending contracted in December as Americans took home lower incomes amid a deepening recession, the Commerce Department said Monday.

Consumption expenditures shrank for the six consecutive month, falling by 1.0 percent in December from the previous month, a steeper fall than the 0.9 percent projected by analysts, according to the department.

Expenditures shrank by a revised 0.8 percent in November, it said.

Personal income also contracted for the third consecutive month at 0.2 percent in December, compared with a 0.4 percent decline projected by analysts, as millions of Americans lost jobs as companies downsized to cope with tough times.

In November, income had shrunk 0.4 percent based on revised estimates.

Personal income, which tracks income from all sources, is the largest component of total income is wages and salaries estimated using payrolls and earnings data.

The United States is facing prolonged recession after a housing mortgage crisis sparked financial turmoil across the globe and caused a severe economic downturn.