The federal government's decision to reduce the payroll
tax on companies has led to increased consumer spending, according to MarketWatch. The 2 percent cut in the payroll tax led to a 1 percent rise in personal income at an annualized rate. Meanwhile, consumer spending inched forward 0.2 percent in January.
The 1 percent jump is the largest monthly increase in consumer income in more than 18 months. However, analysts warn that rather than spend the difference, consumers are on average saving the additional income, especially in the face of rising utility prices and non-discretionary spending.
"The personal income and spending report for January showed a slow start to the year for consumers," said chief economist Julia Coronado of BNP Paribas.
"Higher food and gasoline prices are swallowing up a larger proportion of the household budgets and making consumers feel that they should save more and spend less," said Chris G. Christopher Jr., an economist at IHS Global Insight, according to The New York Times.
Consumer income climbed 0.4 percent in December. Despite, the consecutive monthly increases, analysts continue to monitor the inflation rate which has climbed 1.2 percent over the last year.
Unique views: 1,541
Total views: 1,541
All data and information provided on this news blog is for informational purposes only. Infinisource makes no representations as to accuracy, completeness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis. Information regarding employment suits and other legal action is not updated after publication, and may not be current.