US consumer spending posts biggest gain in nearly two years; inflation picks up
Business
Clearly tighter monetary policy has to fully impact consumers showing that Fed has more work to do
(Reuters) - The US consumer spending increased by the most in around two years in January amid a surge in wage gains whereas increased inflation has added the fears among the financial market that the federal reserves could continue raising interest rate.
The latest indication that the economy was nowhere near a much dreaded recession was the Commerce Department’s report. The data earlier this month had also showed robust job growth and lowest unemployment rate in more than 53 years.
The Chief Economist at LPL Financial has said that clearly the tighter monetary policy has to fully impact consumers showing that Fed has more work to do in the slowing aggregate demand.
The consumer spending shot up 1.8 percent during the previous month that was the largest increase since March 2021. In terms of inflation the consumer spending increased 1.1 percent which is also the largest gain since March 2021.
There was 0.9 percent jump in salaries and wages while the cost of living witnessed 8.7 percent adjustment that was the highest since 1981. Personal income saw a solid 0.6 percent increase and disposable income witnessed a 7.9 percent drop in tax payment.
Despite increased spending the savings were increased at rate of 4.7 percent which was the highest in one year.
