It definitely looks like American consumers have gotten past the worries that slowed their spending growth during the summer. For six straight months, spending has increased, according to the Bureau of Economic Analysis. It rose quite robustly in December, up 0.7%. Meanwhile, personal incomes have also been rising at a moderate pace. They were up 0.4% last month. Yet saving declined, since spending growth outpaced income growth. Enough time has elapsed that we can now make some firm statements about the trends we have been seeing for the past couple of months.
Let's start with the chart for income and spending:
Disposable income growth has tracked personal income growth fairly closely over this period. You can see that, after rising strongly through April, personal income growth (green line) dipped during the early summer months. Since then it has mostly rebounded. For the last three months shown it was up quite strongly.
But spending growth (red line) has been even more aggressive since June. Americans haven't been shy about opening back up their wallets during this period. Since June, annualized personal consumption increased by $295 billion, or 2.9%.
Whenever spending growth outpaces income growth, however, saving suffers. That's pretty clear from its chart: