Stimulus checks spark 2.4% surge in consumer spending and boost economy in early 2021

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Consumer spending jumped 2.4% last month as $600 stimulus checks hit bank accounts and unemployment benefits were increased. That's the biggest increase in spending since last June.

The numbers: Americans increased spending in January for the first time in three months after the government sent $600 stimulus checks to families and boosted unemployment benefits as part of an effort to shore up the economy.

The average American family earns about $69,000 a year or more than $5,700 a month, according to a 2019 U.S. Census report. A $600 check is equal to about 10% of their monthly pay. Many economists predict inflation will surpass 2% once the pandemic fades and the U.S. recovers, but Fed officials contend any increase will be mild and temporary.What happened: Consumers spent more on recreational vehicles, groceries, alcoholic beverages and a wide variety of goods.

A separate “core” measure that strips out food and energy increased 0.3% last month. The core PCE has advanced 1.5% in the past 12 months.The big picture: Consumer spending, the biggest contributor to U.S. economic growth, is likely to keep going up. What they are saying? “Government checks did their work, as both income and spending increased dramatically in January following the stimulus package passed in late December,” said Robert Frick, corporate economist at Navy Federal Credit Union.

 

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Now if we could just keep this going... brrrr

Inflation

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