Consumer spending slows in January but income growth and inflation speed up

• March 1, 2018
• realestate
• Announcements, Business & Markets, Real Estate, Real Estate Finance, Your Real Estate Life

Consumer spending in January rose a scant 0.2% as Americans cut back after the holidays. And spending fell for the first time in a year if adjusted for inflation, the government said Thursday.

Economists polled had forecast a 0.3% increase in spending.

At the same time, though, incomes rose 0.4% and after-tax incomes posted the biggest gain since 2012 in the wake of the Trump tax cuts. Real disposable income surged 0.9%.

The combination of higher incomes and slower spending boosted the U.S. savings rate to 3.2% from 2.5%.

A strong economy is also stoking more inflation. The Federal Reserve’s preferred PCE inflation index surged 0.4% in January, the Bureau of Economic Analysis said.