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Consumer Spending Rose In January After Adjusting For Low Gas Prices

Economy Tribune News Service

Consumer Spending Rose In January After Adjusting For Low Gas Prices

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By Jim Puzzanghera, Los Angeles Times (TNS)

Consumer spending bounced back in January after taking into account sharply lower gas and energy prices, the Commerce Department said Monday.

Overall spending actually fell for the second straight month, the first time that’s happened since the Great Recession. But economists said the decline was misleading because it was caused by the steep decline in energy prices.

When adjusted for inflation, which has been low as oil prices have plunged, consumer spending actually rose 0.3 percent in January, the Commerce Department said.

The increase in real spending followed a 0.1 percent decline in December.

Personal income rose 0.3 percent in January, the same as in December, although economists had been expecting a 0.4 percent increase.

“The consumer is stepping off the new year at a fast clip, and where the consumer goes, the broader economy is sure to follow,” said Chris Rupkey, chief financial economist at Union Bank in New York.

Not taking into account inflation, consumer spending declined by 0.2 percent in January after dropping 0.3 percent in December. The last time spending fell for two straight quarters was in early 2009.

But spending on gas, heating oil and other energy products are included in the figure and those costs have fallen sharply.

The price index for energy goods and services fell 10.4 percent in January, the seventh straight monthly drop and double December’s 5.2 percent decline, the Commerce Department said.

The broader price index for personal consumption expenditures, which is the Federal Reserve’s preferred inflation gauge, rose just 0.2 percent in the 12 months ended Jan. 31.

The Fed wants inflation to increase 2 percent annually.

Excluding volatile energy and food prices, the annual inflation rate through January was 1.3 percent.

(c)2015 Los Angeles Times, Distributed by Tribune Content Agency, LLC

Image: Philippe Huguen / AFP

10 Comments

  1. Dominick Vila March 3, 2015

    Lies! Lies! Chant conservatives as they cash in on higher stock dividends fueled by higher profits and consumer spending. The only “lies” they don’t talk about is the economic disaster they created, their dependence on deficit spending, their record dependence on borrowed money to offset irresponsible tax cuts and their refusal to fund their crusades, or their insistence on trickle down economics. To their credit, those are not lies, those are facts. Since they cannot run away from their record, their only option is to deny the realities of Democratic policies and leadership.

    Reply
    1. angelsinca March 3, 2015

      Calm down Vila. The current escalating price of fuel, and the economic recoil from ACA premium & mandate shock, and the realization of increased income taxes finally due will easily offset these temporary ‘old news’ gains from January. But feel free to adjust your blame accordingly.

      BTW, if I recall correctly, it was you that vehemently denied Democratic policy had ANYTHING to do with the price of fuel when it approached $5/gal. Looks like you’ll have the chance to repeat that avoidance again, real soon. But feel free to place blame squarely on the GOP. For this propaganda, you will only lose more democratic votes. Didn’t learn much from the midterms, did you?

      Reply
      1. Dominick Vila March 3, 2015

        Yes, I stated, and I reiterate, the Federal government policies had very little to do with gas prices reaching $4.60 a gallon in 2008, and that the same is true today. OPEC price fixing, the law of supply and demand, production levels, economic crises at home and abroad, and an increasing tendency by consumers to reduce energy consumption influence the price of oil a lot more than anything our POTUS – Republican or Democrat – do. BTW, the excuse for the recent, modest, increase in the price of gas was attributed to maintenance at refineries to prepare for the transition from Winter to Summer grade oil, and a strike. With Summer driving on the horizon, more excuses are likely to emerge.

        Reply
        1. Independent1 March 4, 2015

          Despite what Angel says, fuel prices are not too likely to rise soon, in fact they may be plunging because they’re pumping so much crude they’re running out of places to store it.

          Excerpts from a story posted about 8 hours ago:

          US running out of room to store oil; price collapse next?

          Oil glut: US running out of room to store crude; prices for oil and gasoline could plunge

          NEW YORK (AP) — The U.S. has so much crude that it is running out of places to put it, and that could drive oil and gasoline prices even lower in the coming months.

          For the past eight weeks, the United States has been producing and importing an average of 1.1 million more barrels of oil every day than it is consuming. That extra crude is flowing into storage tanks, especially at the country’s main trading hub in Cushing, Oklahoma, pushing U.S. supplies to their highest point in at least 80 years, according to the Energy Department.

          If this keeps up, storage tanks could approach their operational limits, known in the industry as “tank tops,” by mid-April and send the price of crude — and probably gasoline, too — plummeting.

          The supply growth may even be speeding up. U.S. crude supplies rose 10.3 million barrels last week, the government said Wednesday, the largest weekly increase since October 2002.

          http://finance.yahoo.com/news/us-running-room-store-oil-171025359.html;_ylt=A0LEVxVDxvdULf4AqDtXNyoA;_ylu=X3oDMTEzaTduOWwxBGNvbG8DYmYxBHBvcwMxBHZ0aWQDVklQNTgyXzEEc2VjA3Nj

          Reply
          1. angelsinca March 4, 2015

            I probably should have read the article before noticing the dramatic rise in gas prices over the past 10 days.

            Reply
          2. Independent1 March 4, 2015

            It sounds like you may be having a regional gas spike due to one of the causes Dominick mentioned like a refinery that supplies your region being offline or something. Here in Maine the price of gas has bounced around between $2.30 – 2.50 since the beginning of 2015.

            Reply
          3. Dominick Vila March 5, 2015

            Angel probably lives in Florida. So do I. I paid $2.38 a gallon two days ago, about half of the record high established in July 2008.

            Reply
          4. angelsinca March 5, 2015

            I agree. Regional blending is one cause, CA taxes and a gullible public are also drivers. The past 2 weeks, the price of regular has ranged between $3.25-$3.95 gal.

            Reply
        2. Independent1 March 4, 2015

          Despite what Angel says, fuel prices are not too likely to rise soon, in fact they may be plunging because they’re pumping so much crude they’re running out of places to store it.

          Excerpts from a story posted about 8 hours ago:

          US running out of room to store oil; price collapse next?

          Oil glut: US running out of room to store crude; prices for oil and gasoline could plunge

          NEW YORK (AP) — The U.S. has so much crude that it is running out of places to put it, and that could drive oil and gasoline prices even lower in the coming months.

          For the past eight weeks, the United States has been producing and importing an average of 1.1 million more barrels of oil every day than it is consuming. That extra crude is flowing into storage tanks, especially at the country’s main trading hub in Cushing, Oklahoma, pushing U.S. supplies to their highest point in at least 80 years, according to the Energy Department.

          If this keeps up, storage tanks could approach their operational limits, known in the industry as “tank tops,” by mid-April and send the price of crude — and probably gasoline, too — plummeting.

          The supply growth may even be speeding up. U.S. crude supplies rose 10.3 million barrels last week, the government said Wednesday, the largest weekly increase since October 2002.

          http://finance.yahoo.com/news/us-running-room-store-oil-171025359.html;_ylt=A0LEVxVDxvdULf4AqDtXNyoA;_ylu=X3oDMTEzaTduOWwxBGNvbG8DYmYxBHBvcwMxBHZ0aWQDVklQNTgyXzEEc2VjA3Nj

          Reply
      2. Independent1 March 4, 2015

        You really need to keep up with the times. Rather than the price of fuel rising, it’s possible that it may soon be plunging again because there’s so much crude oil around they’re running out of room to store it.

        Here’s some excerpts from a story posted just 8 hours ago:

        US running out of room to store oil; price collapse next?

        Oil glut: US running out of room to store crude; prices for oil and gasoline could plunge

        NEW YORK (AP) — The U.S. has so much crude that it is running out of places to put it, and that could drive oil and gasoline prices even lower in the coming months.

        For the past eight weeks, the United States has been producing and importing an average of 1.1 million more barrels of oil every day than it is consuming. That extra crude is flowing into storage tanks, especially at the country’s main trading hub in Cushing, Oklahoma, pushing U.S. supplies to their highest point in at least 80 years, according to the Energy Department.

        If this keeps up, storage tanks could approach their operational limits, known in the industry as “tank tops,” by mid-April and send the price of crude — and probably gasoline, too — plummeting.

        The supply growth may even be speeding up. U.S. crude supplies rose 10.3 million barrels last week, the government said Wednesday, the largest weekly increase since October 2002.

        http://finance.yahoo.com/news/us-running-room-store-oil-171025359.html;_ylt=A0LEVxVDxvdULf4AqDtXNyoA;_ylu=X3oDMTEzaTduOWwxBGNvbG8DYmYxBHBvcwMxBHZ0aWQDVklQNTgyXzEEc2VjA3Nj

        Reply

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