Economic data weighs heavily on the U.S dollar index on Friday

According
to the economic data on Friday, consumer spending gained steadily last month but
the growth was offset by lower than expected increase on income’s front.
Together with moderate growth in consumption and weighed business sentiment, economic
growth is expected to keep a slower pace in 2020.

Consumer spending posted a 0.1% increase (adjusted for inflation) in December that matched the analysts’ forecast. In November, the growth was recorded at 0.3%. As per the experts, December’s data suggests slower growth for consumer spending in 2020’s first quarter.

Consumer
Spending Climbed 4.0% In Fiscal 2019

For
fiscal 2019 as a whole, consumer spending climbed 4.0%; the smallest gain
recorded in the past three years. In 2018, consumer spending had surged by 5.2%.
The Bureau of Economic Analysis also reported the personal consumption
expenditures (PCE) price index to have gained 0.3% in December. The gain was
branded the sharpest since April 2019. Experts cited a 1.5% increase in
services costs and energy goods to have contributed to the upbeat PCE price
index in December. Prices in the food industry, on the other hand, remained unchanged.

The
PCE price index had noted a 0.1% increase in November. The annual growth in the
index was recorded at 1.6% for 2019. The core PCE price index (excluding
volatile components like food and energy) registered a 0.2% growth in December
after climbing 0.1% in the previous four months in a row. The core PCE index
jumped 1.6% in fiscal 2019. The
United States Federal Reserve is known to prefer the core PCE index to
measure inflation. The index missed the 2% inflation target of the U.S Fed
through all months of 2019.

The
Labor Department also revealed the Employment Cost Index (ECI) to have climbed
0.7% in the recent quarter that was in line with the growth recorded in the
third quarter. The Employment Cost Index has a reputation of the broadest
measure used to asses the labor costs. ECI dropped to 2.7% in terms of year
over year gain in Q4. In the third quarter, labor costs had seen a 2.8%
increase (year over year).

Savings
Posted A Record High Of $1.31 Trillion In 2019

After
a 0.4% gain in personal income in November, December’s gain dropped to 0.2%. On
the income’s front, 2019 posted a 4.5% increase while the gain was recorded at
a much higher 5.6% in 2018. December’s report accentuated wages to have climbed
0.3% versus November’s 0.4%.

Savings
dropped to $1.28 trillion in December versus $1.30 in the previous month. In
the entire year, however, savings posted a record high of $1.31 trillion. In 2018,
savings were capped at $1.21 trillion.

The
U.S dollar index lost strength following the economic data on Friday with the
EUR/USD having hiked to around 1.11 level where it closed the last week.