U.S. consumer spending drops with inflation hitting 40-year high
BNN Bloomberg
U.S. inflation-adjusted consumer spending fell last month by the most since February, suggesting that Americans tempered their outlays amid the latest COVID-19 wave and the fastest inflation in nearly 40 years.
U.S. inflation-adjusted consumer spending fell last month by the most since February, suggesting that Americans tempered their outlays amid the latest COVID-19 wave and the fastest inflation in nearly 40 years.
Purchases of goods and services, adjusted for changes in prices, decreased 1 per cent from November, the Commerce Department said Friday.
The personal consumption expenditures price gauge, which the Federal Reserve uses for its inflation target, rose 0.4 per cent from a month earlier and 5.8 per cent from December 2020, the most since 1982. Unadjusted for inflation, spending fell 0.6 per cent, while incomes rose 0.3 per cent.
In another sign of inflation pressures throughout the economy, a separate Labor Department report Friday showed U.S. employment costs rose at a robust pace for a second straight quarter, highlighting the rapid compensation gains seen in the second half of the year as businesses competed for a limited supply of workers.
The data come after the Fed, seeking to tame inflation and preserve the recovery, endorsed interest-rate liftoff in March and opened the door to more frequent and potentially larger hikes than anticipated following its two-day policy meeting on Wednesday.
