While wages grew 0.3 percent in January from December, spending on goods, which includes everyday items and those meant to last more than three years, continued to decline for the second straight month. Spending was boosted by the purchases of services, seeing a 0.9 percent rise from the previous month, the highest jump since October 2001, the Commerce Department said.
December's spending figures were drastically revised to reflect only a 0.1 percent boost as compared to an estimated 0.4 percent predicted earlier. Economists have blamed the unusually cold weather conditions for keeping shoppers at home, but expect that this could result in a uptick in utilities spending.
January was the first month that 1.4 million Americans were without extended unemployment benefits, and this could have had an impact on the overall number. But growing incomes and a stronger job market could help boost consumer expenditure in the coming months.
According to the report, inflation was also kept in check, which rose 1.2 percent in January from a year earlier, and was lower than the Fed's estimate of 2 percent. Excluding food and energy, prices rose 1.1 percent.