As the economy starts to stabilize and signs of lights are peaking through from an array of different industries, the overlying key to a full recovery is the consumer.  Whether it is their confidence, spending or income, the consumer is the biggest driver of the economy.

This morning, the Bureau of Economic Analysis released the personal income and spending results from December 2011.  After a slight (0.1%) increase in November, spending by the consumer was flat in December.  Weaknesses from both non-durable and durables helped keep spending down.  The decline could be directly related to declines in both auto sales and energy prices.

The savings rate climbed to 3.95% in December, the highest level since August.  While the current saving rate increased slightly, it remained well behind the 5.32% average since the collapse in October 2008.

While spending was flat in December, personal incomes climbed 0.5%, after a small 0.1% increase in November.  Incomes were boosted by a healthy 0.4% increase from the wages & salaries sector.  Increased wages are a good sign in boosting consumer morale; with a smaller savings rate and an increased income, consumer spending will hopefully continue to increase and help boost the economy.  

The chart below shows the month-over-month percentage change for the important wage & salary sector.