Consumer spending is rising and has sped up a little since last month.
The Federal Bureau of Economic Analysis tracks total spending in the U.S. through personal consumption expenditure data. In January, spending hit $14.3 trillion — a 1.1% increase since December, which is one of the largest monthly pickups since March of 20212 and the fifth largest since the COVID-19 pandemic hit.
According to the data, spending rose 2.2% in the goods category which the bureau says is due to inflation but offset by lower gas prices.
Services rose 0.6% monthly but were offset by a decrease in utility prices.
Some items that rose the most quarter to quarter: school lunches are up 42% as free lunch programs end across the country.
Spending on rideshares and taxis is up 15% and spending by foreign tourists in the U.S. also rose 13%.
Some of the biggest decreases in spending came from eggs, which are down 11%.
Fuel oils, like propane, are down 10% and spending on auto leases is down 9%.
Local economist Jim Rounds says the spending rise is not unexpected.
“You combine people going into more debt, with extra money bouncing around the economy, even with inflation, you’re still seeing extra spending,” Rounds said. “That’s probably going to continue a little while longer until the Federal Reserve Board starts sucking money back out of the economy.”
Debt is also rising.
Before the Great Recession, spending and debt were in line with each other. Since then, consumer debt has fueled spending, accelerating at a faster pace.
The relationship between these two measures is one of the indicators the Federal Reserve and economists like Rounds want to see go back in balance.
