financetom
Economy
financetom
/
Economy
/
January Consumer Spending Unexpectedly Contracts; Annual Core Inflation Slows Down
News World Market Environment Technology Personal Finance Politics Retail Business Economy Cryptocurrency Forex Stocks Market Commodities
January Consumer Spending Unexpectedly Contracts; Annual Core Inflation Slows Down
Feb 28, 2025 7:58 AM

10:42 AM EST, 02/28/2025 (MT Newswires) -- Consumer spending unexpectedly declined last month, while the Federal Reserve's preferred inflation metric decelerated at the annual level, government data showed Friday.

Personal consumption expenditures decreased 0.2% in January following a 0.8% gain the month before, the Bureau of Economic Analysis said in a report. The Bloomberg-polled consensus called for a slowdown in spending growth to 0.2%.

Goods spending turned negative last month, at 1.2% as outlays on durables and nondurables contracted. Services spending growth slowed down to 0.3% from 0.7% on a monthly basis.

"One-off factors, such as the wildfires in California and inclement weather, may have contributed to the slower pace of spending at the start of the year," TD Economics Economist Ksenia Bushmeneva said in a note. "This suggests a potential bounce-back in spending in the coming months."

The annual headline PCE price index moved down to 2.5% growth in January, meeting the Street's forecast, from 2.6% in December. Inflation held steady on a sequential basis at 0.3% last month, in line with the market estimate.

The Fed's preferred core measure, which excludes food and energy, decelerated to 2.6% in January from 2.9% the month before. Sequentially, the core measure accelerated to a 0.3% gain from a 0.2% rise. Both figures were in line with analysts' expectations.

"Broadly speaking, US households remain in good financial shape, supported by a still healthy labor market and a significant wealth cushion," Bushmeneva said. "As long as this remains the case, we expect real consumer spending to stay resilient this year, with growth moderating to around 2%."

However, consumer sentiment has deteriorated in recent months amid political uncertainty, while US President Donald Trump's tariff plans has led to a significant increase in year-ahead inflation expectations, Bushmeneva said.

Last week, final results from the University of Michigan's Surveys of Consumers showed that year-ahead inflation expectations hit the highest levels since November 2023 as sentiment slumped this month.

Comments
Welcome to financetom comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Related Articles >
JPMorgan has a new way to gauge its green progress
JPMorgan has a new way to gauge its green progress
Nov 15, 2023
As the largest energy banker, JPMorgan is a frequent target of criticism over Wall Street’s role in the climate crisis. At the same time, the bank is a leading US arranger of green bonds, making it vulnerable to Republicans seeking to protect the fossil fuel industry.
India looking into 'freak' incidents like damage to Sikkim's Chungthang dam: RK Singh
India looking into 'freak' incidents like damage to Sikkim's Chungthang dam: RK Singh
Oct 18, 2023
Stressing on the need to have quick ramp up and ramp down energy sources for grid balancing, the minister described hydroelectric power's role as essential in the path to energy transition as wind energy is intermittent and the sun doesn't shine 24×7.
In fight to curb climate change, a grim report shows world is struggling to get on track
In fight to curb climate change, a grim report shows world is struggling to get on track
Nov 14, 2023
The State of Climate Action report released on Tuesday by the World Resources Institute, Climate Action Tracker, the Bezos Earth Fund and others looks at what's needed in several sectors of the global economy power, transportation, buildings, industry, finance and forestry to fit in a world that limits warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) over pre-industrial times, the goal the world adopted at Paris in 2015. The globe has already warmed about 1.2 degrees Celsius (2.2 degrees Fahrenheit) since the mid-19th century.
Zoomed Out | Critical Minerals — why India's current strategy to become self-reliant is so vital
Zoomed Out | Critical Minerals — why India's current strategy to become self-reliant is so vital
Nov 29, 2023
Internationally, there are genuine security concerns related to the criticality in building more diverse and dependable value chains for critical minerals, about their environmental and social sustainability, and technological challenges. While, India has taken the right steps for creating an ecosystem for accelerated exploration and production of critical and new age minerals, observes FICCI Mining Committee Co-Chair Pankaj Satija.
Copyright 2023-2025 - www.financetom.com All Rights Reserved