WASHINGTON (AP) — Bouncing back from months of retrenchment, America’s consumers stepped up their spending by a solid 2.4% in January in a sign that the economy may be making a tentative recovery from the pandemic recession.
Friday’s report from the Commerce Department also showed that personal incomes, which provide the fuel for spending, jumped 10% last month, boosted by cash payments most Americans received from the government.
The January spending increase followed two straight monthly spending drops that had raised concerns that consumers, who power most of the economy, were hunkered down, too anxious to travel, shop and spend. Last month’s sharp gain suggests that many people are growing more confident about spending, especially after receiving $600 checks that went to most adults last month in a federal economic aid package.
The government also reported Friday that inflation by a measure preferred by the Federal Reserve rose a moderate 0.3% in December. That left prices up 1.5% over the past 12 months, well below the Fed’s 2% target.