Personal income plunges in Jan. 2013, spending declines on big ticket items as consumers had to spend more for fuel, high gas prices will constrain consumer spending thru 1stQ 2013-USA Today

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3/1/13, "Personal income plummets 3.6% in January" USA Today, Beth Belton

"Personal income growth plunged 3.6% in January, the biggest one-month drop in 20 years, the Commerce Department said Friday. And consumer spending rose just 0.2% with most of it going toward higher heating bills and filling up the gas tank.

The income drop was offset by Americans' savings a hefty 2.6% rise in December. But most of that gain, analysts said, reflected a rush by companies to pay dividends and bonuses before income taxes increased on top earners at the start of 2013. 

There were spending declines in January for big-ticket items that last three years or more, like cars and appliances, and non-durable goods, like clothing and food. Some economists said the declines could be blamed on a 2% federal payroll tax cut expired Dec. 31. Income taxes on the wealthiest Americans rose starting Jan. 1....

The nationwide average for a gallon of unleaded gas has jumped 50 cents, about 15%, since Jan. 1 to $3.77. Some relief is expected this spring.

"Households absorbed the large drop in income in January by reducing their saving rather than their spending," a research note from Toronto-based Capital Economics research firm said. "But the effects of the payroll tax hike and the latest surge in gasoline prices will continue to constrain consumption in the first quarter."...

January's 0.2% consumer spending gain follows a downwardly revised 0.1% gain in December, Commerce said Friday."...

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