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U.S. consumer spending grew by 0.2 percent in February, sharply slower than the 2.7-percent gain in January, the U.S. commerce department reported.
Spending on services, such as restaurant meals, expanded by 0.9 percent while the purchase of goods slipped 1 percent. Vehicle purchases were off 4 percent, due largely to the ongoing shortage of computer chips and rising sticker prices due to higher costs for key materials.
In January, spending surged as the Omicron variant ebbed, while in February consumers felt the impact of inflation, according to The Wall Street Journal.
Net incomes, adjusted for inflation, fell for the seventh consecutive month, reaching their lowest level since the COVID War began in March 2020, the department said.
Consumer prices added 0.6 percent for the month and 6.4 percent year on year, according to the Personal Consumption Expenditures Price Index, a 40-year record.
“The outlook is definitely not as rosy as it was,” Bank of America economist Alex Lin said to the WSJ. “We’re expecting growth to slow down and consumer spending to slow with it.”
Still, strong demand for items in short supply should keep consumer spending growing in the months ahead, analysts told the WSJ.
TREND FORECAST: About 70 percent of the U.S. economy depends on consumer spending. As unchecked inflation forces consumers to sit on their wallets, the economy’s trajectory toward recession and Dragflation will accelerate.
Already sales of consumer staples are waning. As reported in The Wall Street Journal, sales volumes have begun to fall in a number of categories, and people are buying staple mainstays in smaller quantities.
Before and during the height of the pandemic, sales volumes of staples increased even as prices rose.
According to a Bernstein analysis of Nielsen figures, on 22 February [two days before the Ukraine War began] volume sales of cereal were down 7.2 percent on a two-year compound basis; cleaning product volume sales fell 5.1 percent while prices for products in those categories rose 9.5 percent and 7.2 percent respectively.