Personal Income Up .8% in Jan.; Consumer Spending Rises .6%

Personal income, boosted in part by a federal employee pay increase, rose 0.8% in January while consumer spending increased 0.6%, the government reported today.

The Commerce Department said incomes totaled a seasonally adjusted annual rate of $4.60 trillion after rising 0.5% in December.

“The January increase was boosted by cost-of-living adjustments to several federal transfer payment programs and by a pay raise for federal government employees,” the department said.

The 3.6% federal raise added $3.5 billion at an annual rate to government payrolls.

The January income boost was offset somewhat by an increase in personal contributions for social insurance programs and by a decrease in subsidy payments to farmers.

Consumer spending totaled a seasonally adjusted annual rate of $3.60 trillion following a 0.6% gain in December.

Consumer spending is watched closely as a barometer of economic health because it accounts for about two-thirds of the nation’s economic activity.

The report showed that Americans’ incomes after taxes rose 0.9%, up from December’s 0.4% gain.

Americans’ savings rate, savings as a percentage of disposable income, rose 5.9% against December’s 5.5% increase.