WASHINGTON — Americans increased their spending by a huge 2% in December, the biggest rise in more than 11 years, while their incomes went up by 0.8%, the best showing since April, the government reported today.
The Commerce Department said the huge gain in personal consumption spending was attributed in part to a rush by consumers to buy big-ticket items while they could still take advantage of the sales tax deduction. The federal tax law changed on Jan. 1, eliminating that deduction.
The 2% increase followed a 0.6% November rise and a 1.9% October plunge. It was the biggest monthly increase since a 2.5% advance in May, 1975.
Income Sharply Higher
Personal incomes also showed a solid 0.8% advance in December, sharply higher than the modest gains of 0.2% in November and 0.3% in October. It was the biggest income gain since a 1.2% rise in April. The December increase reflected gains in employment, hours and earnings.