The consumer spending in the United States witnessed its biggest fall since late 2009 in December as the households managed to save the extra cash due to the declining prices of gasoline.
According to the Commerce Department report, the consumer spending dropped 0.3 percent after gaining 0.3 percent in October and 0.5 percent in November last year.
The consumer spending accounts for over two-thirds of economic activity of the United States.
Ryan Sweet, Moody’s Analytics’ senior economist, said, “The consumer is poised to do well in early 2015. Lower gasoline prices are going to provide a big lift to consumption.”
The drop in the consumer spending, which is the largest since September 2009, indicated a falling trend in spending at service stations amid tumbling gasoline prices, softness in demand for utilities over weather issues and weak auto receipts.
Another data, released on Monday, showed that the country’s factory activity cooled in the month of January, indicating that the economy may have welcomed the new year on a slightly softer note against the expectations.
Meanwhile, the analysts said that the upbeat and cash-flush consumers are likely to bring spending on track and buoy the economy in 2015.
The spending data was incorporated in the fourth-quarter gross domestic product report released on Friday. The consumer data showed the economy growing at an annual pace of 2.6 percent, with the consumer spending increasing at a brisk rate of 4.3 percent, which is the fastest since 2006.
According to the economists, the fourth-quarter GDP growth is expected to be revised at the rate of at least 2.8 percent after another report by the Commerce Department on Tuesday suggested stronger non-residential construction spending in the month of December than earlier expected.
The economists have estimated the consumer spending for the first quarter ranging between four and five percent rate.