Personal incomes rise 10 percent in January, inflation remains low

Personal incomes rise 10 percent in January, inflation remains low
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Personal incomes rose 10 percent and inflation remained low in January as another round of coronavirus aid hit U.S. households, according to data released Friday by the Commerce Department.

Consumer spending rose by 2.4 percent and disposable income rose by 11.4 percent in January shortly after former President TrumpDonald TrumpBiden says Roe v. Wade under attack like 'never before' On student loans, Biden doesn't have an answer yet Grill company apologizes after sending meatloaf recipe on same day of rock star's death MORE and Congress approved a second round of stimulus checks and the renewal of expanded unemployment benefits. Personal incomes had increased just 0.6 percent in December after two straight months of declines.

Americans also saved a whopping 20.5 percent of their disposable income in January, more than twice the pre-pandemic savings rate.

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Despite the injection of stimulus, inflation as measured by the personal consumption expenditures price index minus food and energy — the Federal Reserve’s preferred metric — was just 1.5 percent in the year since December 2019 and 0.3 percent in January

The Fed’s ideal level of annual inflation is 2 percent, though the bank is hoping to keep inflation slightly above that target to make up for years of shortfalls.

The latest income and inflation data comes as the White House and Fed try to temper fears that further fiscal and monetary economic support could spur rampant price and wage increases as the U.S. nears the end of the pandemic.

The House is scheduled to vote Friday on President BidenJoe BidenSunday shows preview: US reaffirms support for Ukraine amid threat of Russian invasion The Fed has a clear mandate to mitigate climate risks Biden says Roe v. Wade under attack like 'never before' MORE's $1.9 trillion economic relief bill, which would provide another round of direct payments to households, extend enhanced unemployment benefits, aid to state and local governments, and more forgivable loans to small businesses.

Fed Chairman Jerome Powell also said this week that the bank will not hike rates or reduce its monthly Treasury and mortgage bond purchases until the labor market recovers from the pandemic, annual inflation returns to 2 percent and is on track to exceed that level.

 

Updated at 1:09 p.m.