Breaking News         Latest US News              New York News              Fx Tribune

How to optimise the costs of your business
Growth in consumer spending slowed in January despite a solid increase in incomes as rising prices hurt Americans’ buying power.The annual inflation rate rose to 1.9%, its highest level since 2012 and close to the Federal Reserve’s target, the...

Consumer spending growth slows as rising inflation hits Americans' purchasing power

Growth in consumer spending slowed in January despite a solid increase in incomes as rising prices hurt Americans’ buying power.The annual inflation rate rose to 1.9%, its highest level since 2012 and close to the Federal Reserve’s target, the...

Consumer spending growth slows as rising inflation hits Americans' purchasing power

Growth in consumer spending slowed in January despite a solid increase in incomes as rising prices hurt Americans’ buying power.

The annual inflation rate rose to 1.9%, its highest level since 2012 and close to the Federal Reserve’s target, the Commerce Department said Wednesday.

The data boosted the likelihood that the Fed would raise a key interest rate again in the coming months in an attempt to slow rising inflation.

Although personal income increased by 0.4% in January, up from 0.3% the previous month, inflation took a big bite out of the spending power of that growth. Disposable income after adjusting for inflation declined 0.2% in January, the first such drop in more than three years.

Rising prices also hit consumer spending, which after adjusting for inflation declined by the most since 2009.

Overall, consumer spending increased 0.2% in January, down from 0.5% the previous month and a tick below analysts’ expectations.

But taking into account the rise in prices, consumer spending declined 0.3% in January. It was the first such drop since the summer and a sharp change from a 0.3% inflation-adjusted increase in December.

The Commerce Department’s price index for personal consumption expenditures is the preferred inflation gauge of Fed monetary policymakers. 

The index rose 0.4% in January, twice the increase of the previous month. That meant that for the 12 months ended Jan. 31, prices rose 1.9%.

The annual inflation rate through Dec. 31 was 1.6%. 

The Fed wants prices to rise 2% annually. With strong job growth and the unemployment rate low, an increase in inflation to near the Fed’s target provides more impetus for another hike in the central bank’s benchmark short-term interest rate.

With consumer confidence high and the Trump administration pushing stimulative policies such as tax cuts and increased government spending, Fed officials don’t want inflation to rise too high.

At the Fed’s latest meeting Jan. 31-Feb. 1, officials said another small rate hike could come “fairly soon,” according to minutes released last week. That echoed recent comments from Fed Chairwoman Janet L. Yellen and other policymakers that they could raise the rate at one of their upcoming meetings.

The Fed’s next meeting is March 14-15. Investors believe there is a 29% chance of a 0.25 percentage point rate increase at that meeting, according  to the CME Group futures exchange.

The Fed raised the rate by 0.25 percentage point in December to a target of between 0.5% and 0.75%, the first hike in a year. At the time, Fed policymakers indicated three more increases were coming in 2017. 

President Trump to address Congress tonight, a PwC accountant is at the center of the Oscars gaffe, remembering the 1997 North Hollywood shootout, and the real goal of Trump's executive orders.

President Trump to address Congress tonight, a PwC accountant is at the center of the Oscars gaffe, remembering the 1997 North Hollywood shootout, and the real goal of Trump's executive orders.

President Trump to address Congress tonight, a PwC accountant is at the center of the Oscars gaffe, remembering the 1997 North Hollywood shootout, and the real goal of Trump's executive orders.

President Trump to address Congress tonight, a PwC accountant is at the center of the Oscars gaffe, remembering the 1997 North Hollywood shootout, and the real goal of Trump's executive orders.

Watch a time-lapse of the 89th Academy Awards red carpet in two minutes.

Watch a time-lapse of the 89th Academy Awards red carpet in two minutes.

Construction begins on a new $1.6-billion terminal at Los Angeles International Airport. (Mark Boster / Los Angeles Times)

Construction begins on a new $1.6-billion terminal at Los Angeles International Airport. (Mark Boster / Los Angeles Times)

Oscars Red Carpet Full Interview: Trevante Rhodes

Oscars Red Carpet Full Interview: Trevante Rhodes

"Moonlight" won the best picture Oscar after a botched announcement threw the ceremony into chaos.

"Moonlight" won the best picture Oscar after a botched announcement threw the ceremony into chaos.

The U.S. labor force's guy problem: Lots of men don’t have a job and aren’t looking for one »

How Trump could use the presidency to help his own business interests »

jim.puzzanghera@latimes.com

Follow @JimPuzzanghera on Twitter

Our editors found this article on this site using Google and regenerated it for our readers.

Publish Date : 01 Mart 2017 Çarşamba 10:41

Breaking News Headlines

The curse of the greatest work of engineering of Europe: The 12th line of the London underground is delayed again
The curse of the greatest work of engineering of Europe: The 12th line of the London underground is delayed again
The rental of housing, the most profitable investment: generates 11% and beat on bonds, deposits and Bag
The rental of housing, the most profitable investment: generates 11% and beat on bonds, deposits and Bag
Antonio Rodes: "we're Going to jump out of an economy of waiters and bricklayers to digital"
Antonio Rodes:
The ECB puts an end to the debt purchases and confirms that it will reinvest bonds that mature
The ECB puts an end to the debt purchases and confirms that it will reinvest bonds that mature
The Catalan trade requests the Government to ensure "tranquility," the 21-D
The Catalan trade requests the Government to ensure
What banks allow you to use Apple Pay, Samsung Pay and Google Pay?
What banks allow you to use Apple Pay, Samsung Pay and Google Pay?
The Caixa bet by following "commitment to society" of its founder
The Caixa bet by following
Agrolimen transfer from Sant Joan Despí to Huesca factory broths and soups Gallina Blanca
Agrolimen transfer from Sant Joan Despí to Huesca factory broths and soups Gallina Blanca
Trump and Xi are given a truce in their war commercial
Trump and Xi are given a truce in their war commercial
The gender gap in health, a hole of almost 9,000 million euros a year to Spain
The gender gap in health, a hole of almost 9,000 million euros a year to Spain
The funds star funding business basque are still in 'stand-by'
The funds star funding business basque are still in 'stand-by'
Deutsche Bank: "Spain has lost the favour of the great managers"
Deutsche Bank:
POLLS Results ALL
Who is the most powerful actor in Syria

Front Pages
  • The Sun
NEWS ARCHIVES