The data published on Friday in the United States showed an increase in real personal spending and higher inflation figures. Wells Fargo analysts point out that it is difficult to make a clear reading of the income for January. They argue that while a jump in wages is a support for spending, it is a challenge for the Federal Reserve if it keeps the heat on inflation.
Signs of resistance under volatility
“Real individual spending picked up again at the start of the year, and by rising 1.1% in January, growth more than made up for late-year weakness. The extraordinary January retail sales report pointed to a potential rebound for start the year, at least when it comes to spending on goods.
“We expect the strength in durable goods to be due more to monthly volatility than renewed consumer interest in spending on goods.”
“The sustained strength of real personal income is a mixed blessing. While it could provide a path to the elusive soft landing by supporting consumer spending more sustainably than reducing savings or reliance on more expensive credit cards; it could also point to slower declines in services inflation that could force the Fed to hike higher for longer.”
“The core PCE deflator rose 0.6% and shows that the road to 2% inflation will be bumpy.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
