Consumer Spending Primes Economy for Growth, Says WSJ
New York, NY, February 26, 2021-U.S. household income jumped 10% in January as the government delivered stimulus payments to households, and consumer spending rose 2.4%, priming the economy for a burst in growth this year, reports the Wall Street Journal.
“The increase in income was the second largest on record, eclipsed only by last April’s increase when the federal government sent an initial round of pandemic-relief payments, the Commerce Department said Friday. January’s rise in consumer spending was the first since October.
“Under a $900 billion stimulus program signed by former President Donald Trump in late December, the federal government has been sending one-time cash payments of $600 to most households. It also has been paying jobless workers $300 a week on top of their normal unemployment benefits. Meanwhile, job growth resumed in January after a drop in December. And higher-income households, unable to travel or dine out, have built up a high level of savings.
“‘That combo will be quite powerful in driving consumer spending this year,’ says Lydia Boussour, senior economist at Oxford Economics. She and her colleagues project that by this summer, U.S. output will have fully recovered from last year’s pandemic-related downturn, mainly because of a surge in consumer spending.
“Oxford Economics predicts output will grow 7% this year, which would be the strongest growth in decades. In a Wall Street Journal poll earlier this month, economists on average expected gross domestic product to expand nearly 4.9% this year.”