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(Bloomberg) — US consumer spending barely rose in January after economic growth was weaker than previously reported at the end of last year.
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Inflation-adjusted consumer spending increased 0.1% from the prior month, according to Bureau of Economic Analysis data out Friday. The median estimate in a Bloomberg survey of economists called for no growth.
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Another report from the BEA showed the US economy expanded at a 0.7% annualized rate in the fourth quarter, compared to an initial estimate of 1.4%. It reflected downward revisions to consumer, business and government spending, as well as exports.
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The so-called core personal consumption expenditures price index, which excludes food and energy items, rose 0.4% from December. From the prior year, the gauge — favored by the Federal Reserve — was up 3.1%.
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The figures predate the war in Iran and the ensuing surge in energy prices.
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The January data — though dated — add to concerns that price pressures were building even before the attacks on Iran. Meanwhile, consumers pulled back on goods spending coming out of the holiday shopping season, while they continued to spend on essential services like health care.
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Tax refunds, as well as firm wage growth, should lend some support to consumers’ finances in the months ahead. But economists see a risk to spending going forward given the threat of greater inflation from the war in the Middle East and a fragile job market.
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While Fed officials are widely expected to leave interest rates unchanged at their policy meeting next week, a sustained pickup in inflationary pressures could delay a resumption of rate cuts at a time when President Donald Trump continues to demand them.
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Treasuries and stock futures rallied after the reports.
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—With assistance from Augusta Saraiva, Chris Middleton and Reade Pickert.
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English (US)