Consumer Spending Rebounded in January, but Demand Recovery Remains Vulnerable to Inflation Risks (Report Preview)

This memo offers a preview of Morning Consult’s February U.S. Consumer Spending & Inflation Report. Morning Consult Economic Intelligence subscribers can access the full reporthere.

世界杯足球比赛早上的实际消费者spendin商量g increased in January after two straight months of reduced outlays. Spending growth was broad based, boding well for the Bureau of Economic Analysis’ personal consumption expenditures report later this month. Not only did services categories continue to benefit from consumers’ reallocation of budgets toward these categories in the wake of the pandemic, but goods categories also registered a boost in purchases. Categories such as autos helped support a rebound inretailspending after sharp declines in the previous months.

All income groups contributed to monthly spending gains. However, recent improvements shouldn’t be mistaken for a sign of full recovery. On an annual basis, more than half of spending categories tracked by Morning Consult fell, and the lowest earners recorded sizable declines in real spending.

Household finances found firmer footing as the gap between income and expenses narrowed. Lower spending inNovemberandDecembercoincided with a slight increase in real disposable incomes and a jump in the savings rate. These factors left consumers with a bit more breathing room in January, enabling more households to add to savings or pay off debts. Stifling inflation continues to pinch purchasing power, however, with consumers of all income groups still more likely to report worsening financial situations than improving ones.

Monthly inflation ticked higher in January, serving as a reminder that the Federal Reserve’s fight against inflation is far from won. Annual inflation continued to slow in January, and Morning Consult’s data suggests some price relief may lie ahead in February. However, upside risks continue to percolate for a variety of categories. Softer demand growth for categories such ashousingand otherservices, as well as loosening supply constraints forgoodslike groceries, may help cool price growth later this year. Meanwhile, decelerating price growth for other components that have thus far served as a helper — such as large durables — may be heading for a floor. Competing price pressures will shake out in the months to come, but the mixed signals are unlikely to allow for a swift resolution to the inflation fight this year.

About this report

Morning Consult’s monthly U.S. Consumer Spending & Inflation Report provides a detailed assessment of U.S. adults’ self-reported household financial conditions and spending, as well as consumers’ perception of inflation and supply chain disruptions and the impact of both on purchasing decisions.

Businesses and investors rely on this report to understand emerging trends in consumer demand, purchasing power and shopping patterns across demographics.

The report draws onMorning Consult Economic Intelligence, a high-frequency data set reflecting more than 17,000 daily economic surveys across the world’s 44 largest economies. Full methodology can be foundhere.