Americans' personal income rose in December and they spent all of it and more, giving the nation's retailers one of their best holiday seasons in years.
The Commerce Department reported today that personal income, which includes wages, interest and government benefits, increased by 0.3 percent last month, following a 0.4 percent rise in November. December's gain -- the smallest increase since September -- was weaker than the 0.5 increase many analysts were anticipating.
Spending, meanwhile, rose a brisk 0.8 percent -- the biggest increase since August -- following a solid 0.7 percent gain in November. The increase in spending, right on target with analysts' expectations, gave merchants their best holiday sales since 1992.
With Americans spending more than they earned in December, the personal savings rate -- savings as a percentage of after-tax income -- was pulled to a record monthly low of 1.5 percent. In November, the savings rate was 2 percent.
All that spending also pushed the savings rate to an all-time annual low of 2.4 percent in 1999 compared with a 3.7 percent rate the year before.
Norfolk Southern to cut 550 jobs
ROANOKE, Va. (AP) -- Norfolk Southern Corp. is laying off 550 union workers, blaming falling revenue, high diesel fuel prices and a weak export coal market.
Last Wednesday the company announced an early retirement program for 1,200 non-union employees. The company has about 35,000 employees.
The layoffs, set to take effect Friday, affect track and machine workers who belong to the Brotherhood of Maintenance of Way and are scattered across the Norfolk-based railroad's 12 divisions in 22 states, mostly east of the Mississippi River.
Diesel fuel prices, coupled with problems associated with the company's takeover of Conrail last year, caused Norfolk Southern's fourth-quarter profits to plunge 81 percent to $31 million, or 8 cents a share.
Spokeswoman Susan Bland said the layoffs had more to do with business conditions, including a decline in the export coal market to Asia. She said more layoffs could follow.
Knitting company shutting down
JOHNSTOWN (AP) -- Blaming foreign trade policies and rising costs, officials of a knitting company that has been making clothes since the late 1800s say they are going out of business.
The Johnstown Knitting Mill Co., which traces it roots to 1893 and employs 229 people, will close by late March, company officials announced Friday.
Johnstown Knit, as it is locally known, is an independent-line knitwear manufacturer. It also sells its clothing -- everything from socks to T-shirts to long underwear.
The business has been in the family of the current president, Thomas B. Easterly, for five generations.
"The company attributes a majority of their loss to U.S. foreign trade policies such as NAFTA, which has encouraged many U.S. companies to manufacture goods offshore. This has made it next to impossible for most domestic manufacturers to compete in the marketplace," company officials said in a press release.
Deere targets Caterpillar market
MOLINE, Ill. (Bloomberg) -- Deere & Co., the world's biggest farm equipment maker, plans to revive its tumbling earnings by taking away a share of the $40 billion market for construction machinery from cross-state rival Caterpillar Inc.
Deere is eyeing the $217 billion that the federal government will spend on highway projects in the next six years. It's expanding its product line to snatch business from the primary customers of Caterpillar, the largest construction equipment maker, based in Peoria, Ill.
This week in business
Here are the major business and economic events planned for this week:
Tuesday -- The Federal Reserve's policy panel -- the Federal Open Market Committee -- opens a two-day meeting on interest rate targets.
Wednesday -- The Federal Open Market Committee concludes its two-day meeting on interest rate targets.
Thursday -- The Federal Reserve will release minutes of the December meeting of the Federal Open Market Committee.