Consumer spending in U.S increased moderately in February and, although the inflation shows signs of cooling, it has remained elevated, which may lead to Federal Reserve to increase the rate of fees again this year.
Consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.2% last month, the Commerce Department said on Friday. January data was revised to show that spending grew by 2.0% instead of 1.8% as previously reported.
Economists polled by Reuters had forecast consumer spending rising 0.3%.
- Join Money Times Telegram! Access the news that enriches your day in real time, from the economic and investment markets to relevant topics in Brazil and the world. Click here and take part!
Consumer spending also slowed on the back of modest income gains, as momentum from the biggest cost-of-living adjustment since 1981 for Social Security recipients in January wore off.
January’s upward revision and last month’s gain put consumer spending on a higher growth path in the first quarter after rising at its slowest pace in two-and-a-half years in the October-December quarter. the expanding economy.
Financial market stress following the recent collapse of two regional banks has increased the risk of a recession later this year. Banks have tightened lending standards, which could make it harder for households to access credit, weighing on demand.
Last week, the Fed raised its benchmark interest rate by 25 percentage points but indicated it was about to halt further increases in borrowing costs in a nod to financial market turmoil. The US central bank has raised its benchmark interest rate by a total of 475 basis points since last March, from a level close to zero to the current range of 4.75% to 5.00%.
the index PCE inflation rose 0.3% last month, after accelerating 0.6% in January. In the 12 months through February, the PCE accumulates a high of 5.0%, after 5.3% in January.
Excluding volatile food and energy components, the PCE price index rose 0.3%, up from 0.5% in January. The so-called core price index advanced 4.6% year-on-year in February, up from 4.7% in January. The Fed tracks the PCE index for its 2% inflation target.
Source: Moneytimes
I am an author and journalist with a focus on market news. I have worked for a global news website for the past two years, writing articles on a range of topics relating to the stock market. My work has been published in international publications and I have delivered talks at both academic institutions and business conferences around the world.
