The Department of Commerce reported Friday that a new round of stimulus controls has pushed personal income to its biggest monthly profit since April 2020, although inflation has remained tame.
Personal income rose 10% after a 0.6% increase in December. This was even higher than the Dow Jones’ estimate of 9.5%.
The profit comes from the issuance of $ 600 stimulus payments approved by Congress for millions of Americans, coupled with increased unemployment benefits. Consumers took these checks and spent them quickly, increasing retail sales and increasing overall spending for the month by 2.4%, which was less than the 2.5% estimate.
The slightly softer-than-expected spending data comes amid a 20.5% increase in the personal savings rate, or $ 3.93 trillion. This was the highest level since May 2020.
However, all these expenditures did not increase inflationary pressures.
The price index for personal consumption expenditure, which is the Federal Reserve’s preferred inflation meter, rose by 0.3% for the month, slightly higher than the expectation of 0.2%, but was 1.5% higher than in the year, according to Dow Jones estimates. This was the same for the headline figures and the core, which excludes volatile food and energy prices.
In September, the Fed even adopted an official policy allowing inflation to run hotter than 2% for a period before raising rates.
However, pandemic-related pressures have contributed to a general disinflationary environment that has led policymakers to say they will probably wait years.
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