Consumer doubts

Americans had more money to spend in December, but they are still being cautious.

The Commerce Department said personal income rose by a seasonally adjusted 0.5 percent in December, the highest level since March.

The addition of 200,000 jobs in December was the main reason for the higher incomes.

But wary consumers were not rushing out to spend their extra income. They chose to save it. The personal savings rate for after-tax incomes rose from 3.5 percent in November to 4 percent in December, but the yearly savings rate of 4.4 percent was down from 5.3 percent in 2010. When inflation is figured in, spending actually fell in December.

Consumer spending, though, makes up about 70 percent of the economy, which in turn influences business choices. Businesses spent more to stock up inventories in December, but that is not expected to continue without increased spending dependent on consumers becoming more confident in the economy.