US Consumer Spending Recovers
* Consumer spending increased by 2.4 percent in January.
* While personal income increased by 10 percent; Savings rate followed with 20.5 percent.
* Core personal consumption expenditures index increased by 0.3 percent and 1.5 percent annually.
US consumer spending showed the biggest increase it has experienced in seven months in January, due to pandemic cash subsidies by the government to low-income households and the fall of new COVID-19 infections.
Price pressures have been silenced with the strong recovery in consumer spending as reported by the Ministry of Commerce on Friday (today). There are some concerns that President Joe Biden’s $ 1.9 trillion COVID-19 stimulus package could cause the economy to overheat, and inflation is being monitored closely.
Federal Reserve Chairman Jerome Powell alleviated inflation fears by pointing to low and stable prices that have persisted for three decades.
Consumer spending, which accounts for more than two-thirds of US economic activity, rose 2.4 percent last month.
This was the biggest gain announced since last June, ending two months of decline.
Personal income increased 0.6 percent in December, reported as an overall increase of 10 percent since last April.
It was seen in the reports that consumers bought motor vehicles, entertainment products, food and beverages. In addition, spending on hotel accommodation, restaurants and medical services increased.
Further gains in consumer spending are possible, but windstorms that wreak havoc in Texas and other parts of the densely populated South this month could slow the momentum.
As daily coronavirus cases and hospitalizations decline to levels seen before the Christmas break, the vaccination rate continues to increase.
The recent stimulus package included checks of $ 600 for mostly low-income and some middle-income Americans.
If the Biden administration’s plan is approved, an additional $ 1400 check will be sent to eligible households, and the state safety net for the unemployed will expand.
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