Personal income in the US jumped 10% in January, beating the market expectation of 9.5% and marking its largest monthly gain since April, according to Department of Commerce on Friday.
The steep increase came after the Congress in December issued $600 stimulus checks for millions of Americans.
Recipients spent those checks quickly that led to personal consumption expenditures (PCE) rise by 2.4% in January. This, however, was below the 2.5% market expectation, but it was a significant improvement from the previous months 0.4% contraction.
Overall, personal income increased by more than $1.9 trillion in January, but personal expenditures rose only $341 billion in January, according to the department’s Bureau of Economic Analysis.
PCE price index, the Federal Reserve’s preferred inflation indicator, rose only 0.3% in January, but it still managed to beat 0.2% market consensus.
Although the Fed said in September it will allow inflation to climb slightly above 2% to revive American economy from the pandemic, PCE price index is only up 1.5% year-over-year.
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