The Commerce Department reported on Friday that consumer spending in the U.S. fell 0.2 percent m-o-m in December after a revised 0.7 percent m-o-m decline in November (originally a 0.4 percent m-o-m drop). This marked the second consecutive monthly decrease in consumer spending. Economists had forecast the reading to show a 0.4 percent m-o-m decline.

Meanwhile, consumer income rose 0.6 percent m-o-m in December, following a revised 1.3 percent m-o-m decline in the previous month (originally a 1.1 percent m-o-m decrease). Economists had forecast a 0.1 percent m-o-m advance.

The December gain in personal income reflected primarily reflected increases in government social benefits, compensation, and personal dividend income that were partly offset by a decrease in proprietors’ income.

The personal consumption expenditures (PCE) price index, excluding the volatile categories of food and energy, which is the Fed's preferred inflation measure, increased 0.3 percent m-o-m in December, following an unrevised flat m-o-m reading in the prior month. Economists had projected the index would edge up 0.1 percent m-o-m.

In the 12 months through December, the core PCE increased 1.5 percent, accelerating from 1.4 percent in the 12 months through November. Economists had forecast a climb of 1.3 percent y-o-y.