Personal consumption expenditures declined 0.2% in December, pulling back for the second straight month. Durable and nondurable goods purchases fell 1.0% and 0.7% in December, respectively, with service-sector spending edging up 0.1%.

These data suggest that Americans were more hesitant in their consumer spending in November and December, particularly with rising COVID-19 cases and restrictions in many markets. The savings rate continued to be highly elevated at 13.7% in December, up from 12.9% in November.

The saving rate averaged 16.2% in 2020, well above the 7.5% average seen in 2019. As such, consumers were significantly more cautious in their purchasing in 2020 in light of the pandemic and economic recession.

Over the past 12 months, personal spending has fallen 2.0% since December 2019. Consumers spent 5.4% less on services in December than one year earlier. More encouragingly, durable and nondurable goods spending rose 11.0% and 2.5% year-over-year, respectively.

Meanwhile, personal income rose 0.6% in December following declines in both October and November. The data were heavily influenced by transfer payments in 2020, including in December.

Unemployment insurance has soared from $27.8 billion in February to $1.40 trillion in June. In the latest data, it increased from declined each month since then to $281.2 billion in November to $321.4 billion in December.

In addition, government assistance checks were largely responsible for the 12.2% increase in personal income in April, with new checks issues at year’s end, as well. Overall, personal income has risen 4.1% over the past 12 months.

Wages and salaries rose 0.5% in December, with 2.3% growth over the past 12 months. Manufacturing wages and salaries increased from $956.4 billion in November to $958.1 billion, with 3.7% growth over the past 12 months.