Home Finance U.S. Consumer Spending Drops With Inflation Hitting 40-Year High – Yahoo Finance

U.S. Consumer Spending Drops With Inflation Hitting 40-Year High – Yahoo Finance


(Bloomberg) — U.S. inflation-adjusted consumer spending fell last month by the most since February, suggesting that Americans tempered their outlays amid the latest Covid-19 wave and the fastest inflation in nearly 40 years.
Most Read from Bloomberg
Apple to Rival Square by Turning iPhones Into Payment Terminals
How a Fox News Interview Threw the Antiwork Subreddit Into Chaos
Crypto Secrecy Makes DeFi a Financial Felon’s Wonderland
Stocks Drop in Roller-Coaster Ride for Wall Street: Markets Wrap
Megacap Tech Drives Stocks Toward Best Day in 2022: Markets Wrap
Purchases of goods and services, adjusted for changes in prices, decreased 1% from November, the Commerce Department said Friday.
The personal consumption expenditures price gauge, which the Federal Reserve uses for its inflation target, rose 0.4% from a month earlier and 5.8% from December 2020, the most since 1982. Unadjusted for inflation, spending fell 0.6%, while incomes rose 0.3%.
In another sign of inflation pressures throughout the economy, a separate Labor Department report Friday showed U.S. employment costs rose at a robust pace for a second straight quarter, highlighting the rapid compensation gains seen in the second half of the year as businesses competed for a limited supply of workers.
The data come after the Fed, seeking to tame inflation and preserve the recovery, endorsed interest-rate liftoff in March and opened the door to more frequent and potentially larger hikes than anticipated following its two-day policy meeting on Wednesday.
A surge in coronavirus infections due to the omicron variant likely slowed spending in December as more Americans stayed home, and high prices were probably also a deterring factor. That impact could carry over to the beginning of the first quarter as economic activity remains subdued, though most analysts expect the slowdown to be short-lived.
What Bloomberg Economics Says…
Even though the latest data imply a sizable near-term drop in activity, we estimate the slowdown will be short-lived, with virus cases having already peaked. Robust gains in labor income will continue to support healthy gains in consumer spending as the year progresses.
— Yelena Shulyatyeva and Andrew Husby, economists
Click here for the full note.
“There’s a risk that the high inflation we’re seeing will be prolonged, there’s a risk that it will move even higher,” Chair Jerome Powell said during a press conference Wednesday. “We have to be in a position with our monetary policy to address all of those plausible outcomes.”
The median forecasts in a Bloomberg survey of economists called for a 1.1% decrease in inflation-adjusted spending and a 5.8% rise in the price index from a year ago.
A separate report Thursday showed personal spending grew 3.3% in the final three months of 2021, led by a pickup in services outlays. Friday’s data for December suggest that consumer outlays were concentrated in the earlier part of the fourth quarter.
Inflation-adjusted goods expenditures slumped 3.1%, while spending on services rose 0.1%, according to Friday’s data.
The report also showed that personal incomes increased in December by a slower pace than 0.5% in the prior month.
The saving rate — or personal saving as a share of disposable income — rose to 7.9%, the second straight increase after declining for much of the year.
Wages and salaries advanced 0.7% in December after an 0.6% increase in the prior month as companies continue to raise pay to attract workers amid low labor supply.
Despite sizable pay increases on nominal terms, inflation is eating away at incomes. Disposable personal income, or after-tax income adjusted for inflation, fell 0.2% last month, the fifth straight decline.
The core price index, which excludes food and energy, rose 4.9% from a year ago, the most since 1983. Price pressures are expected to remain elevated in the coming months before cooling later this year.
(Adds chart.)
Most Read from Bloomberg Businessweek
Pharmacy Workers Are the Pandemic’s Invisible Victims
China’s American-Born Olympic Star Is Being Very Careful
Market Turmoil Is Ultimate Test of What’s Real and What’s Not
What Happens When Russian Hackers Come for the Electrical Grid
Amazon’s Banned China Sellers Turn to Walmart’s Marketplace
©2022 Bloomberg L.P.
Virgin Galactic Holdings (NYSE: SPCE) is out with earnings and though very little money is coming in, the company's financial position is on the upswing. Space tourism start-up Virgin Galactic hasn't had much to show for its efforts so far, launching founder Richard Branson into space last summer but then suffering a series of setbacks that has delayed commercial launch. The company's fourth-quarter results were a reminder of its current position: Virgin Galactic lost $0.31 per share on revenue of just $141,000.
Upstart (NASDAQ: UPST), the lender using artificial intelligence in its decision-making on loans, delivered strong results for the fourth quarter of 2021, sending its stock price soaring last week. The share buyback news came as a bit of a surprise because Upstart only went public at the end of 2020 and has been in growth mode ever since. Let's take a look at why Upstart chose to repurchase shares and what it might mean for investors.
Although there hasn't yet been a market crash in 2022, the stock market has been volatile, reflecting the broader economy. Savvy investors know that a market crash is not a bad thing, but a natural part of the process. In the meantime, market volatility is already creating buying opportunities.
Stocks were crushed Tuesday, but it might just be time to buy—for investors with a fairly longer-term time horizon.
UK to shut President Putin out of London market as sanctions mount Ofcom fires warning shot at Russia Today over impartiality FTSE 100 runs out of steam as markets weigh Russia sanctions Jeremy Warner: The fall of the Berlin Wall was meant to be the West's final triumph. It was no such thing Sign up here for our daily business briefing newsletter
The S&P 500 on Tuesday falls into correction for the first time in two years, joining the Nasdaq Composite, as Russia-Ukraine tensions intensify.
The accelerating growth was not enough to assuage a market turning sour on unprofitable growth stocks.
Wood purchased Tesla, Zoom, Twilio, Shopify and Roblox, seeing buying opportunities after their drops.
Yahoo Finance's Julie Hyman and Brian Sozzi discuss news that private equity firm Apollo Global Management is taking auto-parts manufacturer Tenneco private at a big premium. (Apollo is Yahoo Finance's parent company.)
Coinbase (NASDAQ: COIN) reports earnings after the market closes on Thursday, Feb. 24, 2022, and the market doesn't seem to be expecting a lot from the company. Shares of the stock are down 47% since the third-quarter 2021 earnings report was released, and cryptocurrency in general has been under a lot of pressure in those three months. It doesn't need cryptocurrency prices to rise to make money; it needs people to make transactions.
The company says it will pay a total dividend for the year of $10.40 a share, including a special dividend of $2.47.
Third Point Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. A portfolio return of -5.3% was delivered by the flagship Offshore Fund for the final quarter of 2021, bringing its year-to-date returns to 22.7%. Spare some time to check the fund’s top 5 […]
Stock market indexes reversed lower and the S&P 500 and Nasdaq threatened to undercut their previous lows.
In this article, we discuss 8 stocks to sell according to billionaire Louis Bacon. If you want to skip our detailed analysis of these stocks, go directly to 5 Stocks To Sell According To Billionaire Louis Bacon. Louis Bacon is an American investor and hedge fund manager who founded Moore Global Investments in 1989, which […]
Stocks erased earlier gains to trader lower on Wednesday.
The stock market is a constant tug of war between the bulls and the bears. Looking at Palantir’s (PLTR) Q4 performance, Morgan Stanley’s Keith Weiss thinks both had enough to rest their case on. The bulls could point to “another solid top-line beat” as revenue grew by 34% YoY to reach $433 million, coming in ahead of consensus by 3.6%. Additionally, the total customer count hit 237, far above the analysts’ expectation for 219, while operating margins hit 29%, a “full” 7% points ahead of Wall Str
The electric vehicle battery maker achieved its four targeted milestones, but the stock still sags after earnings.
The company announced today that it plans to acquire the core processing company Technisys for $1.1 billion.
The share prices of Apple (NASDAQ: AAPL), Appian (NASDAQ: APPN), and Lemonade (NYSE: LMND) were all tumbling this afternoon as investors processed new information about rising tensions in Europe. Each of the tech stocks had fallen significantly during afternoon trading, with Apple down 2.7%, Appian falling 5.3%, and Lemonade down 6.8%. Yesterday, Russian President Vladimir Putin formally recognized the independence of two regions in Ukraine, which have been held by Russian-backed rebels.
The broader stock market has entered an official 10% correction, but for investors focusing on the Nasdaq Composite (NASDAQINDEX: ^IXIC), double-digit declines from recent highs are nothing new. On Wednesday morning, though, Nasdaq investors saw a little light at the end of a long, dark tunnel, with futures on the index rising more than 1% as of 8:30 a.m. ET. There's even more volatility lurking under the surface of major stock market indexes, with good news celebrated but bad news punished.



Please enter your comment!
Please enter your name here