Personal income rose +0.3% MoM and spending +0.4% MoM in December, while PCE inflation accelerated to +2.9% YoY, showing firmer price pressures late-year.

• Disposable income also increased +0.3% MoM, but employee compensation rose only +0.2% MoM, the weakest since June, indicating income growth relied partly on transfer receipts (about 45% of growth).

• Personal consumption outpaced income for the eighth consecutive month, pushing the savings rate down to 3.6% (lowest since 2022), showing continued drawdown of savings.

• Services spending rose +0.7% MoM while goods spending fell -0.1% MoM, meaning consumption growth remained concentrated in services.

• Real PCE increased only +0.1% MoM, while the PCE price index rose +0.4% MoM (core +0.4% MoM), indicating nominal spending gains were largely price-driven.

• Headline PCE inflation reached +2.9% YoY and core +3.0% YoY, the highest core reading since April 2024, showing an acceleration in annual inflation.

• Goods prices led inflation: durable goods +0.5% MoM and food +0.4% MoM; services prices rose +0.3% MoM, suggesting broader price pressures beyond services.