U.S. Personal Income, Spending Up, But Below Projections

Santa Claus' sled will be fast and full this year, as figures revealed Friday that American consumers stepped up their spending last month, a good sign for the holiday shopping season.

The U.S. Commerce Department reports consumer spending rose a sharp 0.6% from October, outpacing a 0.3% increase in personal income. As a result, the savings rate fell to 2.9% of after-tax income in November, lowest since November 2007.

The numbers bode well for the holidays and for the overall economy: Consumer spending accounts for about 70% of U.S. economic output.

The measure of inflation favored by the Federal Reserve remained subdued, rising 1.8% in November from a year ago. Inflation is running below the Fed's 2% annual target, but the central bank is still confident enough in the economy to have raised interest rates three times this year.