Consumers in the U.S. increased spending in the first month of the year by less than had been anticipated despite a strong surge in incomes as Americans boosted their savings rate, according to The Wall Street Journal. On Monday, the Commerce Department reported a 0.2% increase in consumer spending in January, which was short of economists’ forecast for a 0.4% rise.
The slowdown in spending came despite a 1% increase in personal incomes, marking the largest such gain since May 2009 and outpacing economists’ expectation for a 0.4% rise in January. The increase was boosted by the extension of income tax cuts aimed to strengthen spending, although the savings rate rose in the month to 5.8% from 5.4% previously, suggesting that Americans are feeling cautious about the strength of the recovery. The core consumer price index was up 0.8% year-over-year, with prices adding only 0.1% in January from the previous month.
