U.S. consumer spending was unchanged in December, but savings increased to a three-year high, the government reported Monday, suggesting consumption could rebound in the coming months. The Commerce Department said consumer spending - which accounts for 70 percent of U.S. economic activity - was flat in December following a 0.5 percent gain the previous month. For all of last year, consumer spending rose 3.4 percent, following an advance of 4.2 percent in 2014. Personal income rose 0.3 percent in December after a similar reading the previous month. Wages and salaries increased 0.2 percent after a 0.5 percent jump in November. Income in 2015 was up 4.5 percent, the biggest increase since 2012, after rising 4.4 percent in 2014. Disposable income after accounting for inflation recorded its biggest increase since 2006 last year. With income outpacing spending, savings surged 5.5 percent to $753.3 billion in December - the highest level since late 2012 - from $717.8 billion in November. Higher savings and rising home prices should drive consumer spending in early 2016 and help limit the decline in household wealth from the recent stock-market plunge. With spending flat, inflation fell in December. The inflation gauge favored by the Federal Reserve (Fed) fell 0.1 percent, reflecting further declines in energy prices. For all of last year, the personal consumption expenditures (PCE) price index rose 0.6 percent, the largest 12-month increase since late 2014. Core PCE, which excludes energy and food prices, was flat in December and increased 1.4 percent in 2015, below the Fed's 2 percent inflation target. Economists say the big increase in savings could translate to stronger consumer spending growth in 2016. They also expect that an improving jobs market will fuel spending momentum and help push economic growth back above 2 percent in the current January-March quarter.
