The Atlanta Journal-Constitution
Consumer spending up 2.4% on higher incomes
January increase followed consecutive monthly declines.
WASHINGTON — Bouncing back from months of retrenchment, America’s consumers stepped up their spending by a solid 2.4% in January, the sharpest increase in seven months and a sign the economy may be poised to sustain a recovery from the pandemic-fueled recession.
Friday’s report from the Commerce Department also showed that personal incomes, which provide the fuel for spending, jumped 10% last month, the biggest gain in nine months, boosted by cash payments that most Americans received from the government.
The January spending increase followed two consecutive monthly spending drops. That raised concerns that consumers, who power most of the economy, were hunkered down, too anxious to travel, shop and spend.
Last month’s sharp gain suggests that many people are growing more confident about spending, especially after receiving $600 checks that went to most adults last month in a federal economic aid package.
“The economy weakened late last year as the fiscal support faded and the pandemic intensified, but now it seems to be coming back to life,” said Mark Zandi, chief economist at Moody’s Analytics.
The government also reported Friday that inflation by a measure preferred by the Federal Reserve rose a moderate 0.3% in January. That left prices up just 1.5% over the past 12 months, well below the Fed’s 2% target.
Friday’s report showed consumers boosted their purchases of durable goods — from autos to appliances — by 8.4% last month. The increase was led by spending on autos, household appliances and recreational goods. Spending on nondurable goods rose 4.3%, with solid gains in demand for clothing and food.
By contrast, overall spending on services, which has been hurt for months by the reluctance of many consumers to venture out of their homes, rose just a modest 0.7%. But the weakness reflected in part a drop in spending on utilities.