The Commerce Department announced on Friday that consumer spending in the U.S. fell 0.5 percent m-o-m in December, following a revised 0.6 percent m-o-m advance in November (originally a 0.4 percent m-o-m gain). That was the biggest decrease in personal spending since September 2009. Economists had forecast the reading to show a 0.2 percent m-o-m drop.

Meanwhile, consumer income surged 1.0 percent m-o-m in December after a revised 0.3 percent m-o-m increase in the previous month (originally a 1.0 percent m-o-m advance). Economists had expected the personal income to increase by 0.4 percent m-o-m in December.

The increase in personal income in December primarily reflected increases in personal dividend income, compensation of employees, and farm 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, rose 0.2 percent m-o-m in December, following a revised 0.2 percent m-o-m advance in the prior month (originally a gain of 0.1 percent m-o-m). 

Economists had projected the index would increase 0.2 percent m-o-m. 

In the 12 months through December, the core PCE increased 1.9 percent, the same pace as in the 12 months through October. Economists had forecast a gain of 1.9 percent y-o-y.