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| U.S. consumer (The Total Investment & Insurance Solutions) |
U.S.
consumer spending rose at only a sluggish pace in January, even as signs of
growing optimism about the economy have emerged. The Total Investment & Insurance Solutions
Consumer spending increased 0.2 percent in
January, after a 0.5 percent gain in December, the Commerce Department said
Wednesday. Spending on services — from haircuts to health care — was flat, and
Americans spent less on long-lasting goods such as autos and appliances.
Prices also rose in a sign that inflation has
perked up a bit. A measure of inflation closely watched by the Federal Reserve
rose 0.4 percent in January and has increased 1.9 percent in the past 12
months. That's the biggest year-over-year gain in more than four years.
That
nearly matches the Fed's target of 2 percent and may make a rate hike by the
Fed more likely in the coming months. The
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Excluding the volatile food and energy
categories, core prices rose 0.3 percent in January and 1.7 percent in the past
12 months.
Surveys of consumers have shown a burst of
optimism since the presidential election, yet that has only intermittently
translated into more spending. The Conference Board's consumer confidence index
jumped to a 15-year high in February after a modest dip in the previous month.
Measures
of consumer health are important for growth because consumer spending drives
about 70 percent of economic activity. The
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Income
growth accelerated slightly in January, the data showed, rising 0.4 percent. That
was slightly better than the previous two months. The Total Investment & Insurance Solutions
Yet rising inflation is offsetting some of
that gain and may slow spending in the coming months. Adjusted for taxes and
price increases, Americans' incomes actually slipped 0.2 percent in January,
the largest decline in more than three years
Wednesday's
figures suggest that the economy is still growing at a modest pace. Growth was
just 1.9 percent at an annual pace in the final three months of last year, the
government said Tuesday. That was sharply lower than the 3.5 percent increase
in the third quarter. The Total
Investment & Insurance Solutions
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