WASHINGTON- US consumer spending increased by the most in seven months in January as the government doled out more pandemic relief money to low-income households and new COVID-19 infections dropped, positioning the economy for faster growth in the first quarter.
Despite the strong rebound in consumer spending reported by the Commerce Department on Friday, price pressures were muted. Inflation is being closely watched amid concerns from some quarters that President Joe Biden’s proposed $1.9 trillion COVID-19 recovery package could cause the economy to overheat.
The plan, being considered by the US Congress, would be on top of a rescue package worth nearly $900 billion approved by the government in late December. Federal Reserve Chair Jerome Powell has played down the inflation fears, citing three decades of lower and stable prices.
“Thanks to Washington, the economic outlook in the near future is sunny,” said Sung Won Sohn, finance and economics professor at Loyola Marymount University in Los Angeles.