Consumer Spending Fails To Outpace Inflation - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Business & Finance

Consumer Spending Fails To Outpace Inflation

Overall consumer spending in January increased 0.4% compared with December, but a widely used measure of inflation increased by about the same amount in that period.

In a sign that the U.S. economy could be headed toward a period of stagflation, government numbers released Friday showed that consumers are spending more -- but only to keep up with rising prices.

Overall consumer spending in January increased 0.4% compared with December, but a widely used measure of inflation increased by about the same amount in the same period, the Department of Commerce said Friday.

That means consumers are spending more just to maintain their current levels of goods and services acquisitions -- an indication that there's no real growth in the economy.

Should consumption remain flat amid rising prices, the United States would technically be in a state of stagflation. The country was most recently hit with significant stagflation in the 1970s, when President Richard Nixon was forced to implement wage and price controls in an effort to curb rising costs.

A drop in consumer confidence added to the sense pessimism surrounding the economy Friday. Consumer sentiment, a measure of expectations for income and unemployment, fell to 70.8 in February from 78.4 in January, according to a survey by Reuters and the University of Michigan.

The index has declined almost 30% since January 2007.

Concerns about the economy pushed the Dow Jones Industrial Average down by more than 200 points to less than 12,400 in afternoon trading Friday. The tech-heavy Nasdaq was off 37 points.

Tech stocks didn't escape the bashing. Bellwether IBM was down more than half a point to $114.50. Intel dropped more than 1.5%, while Microsoft declined nearly 2%. Google fell one-half of a point to less than $478.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
The State of Cloud Computing - Fall 2020
The State of Cloud Computing - Fall 2020
Download this report to compare how cloud usage and spending patterns have changed in 2020, and how respondents think they'll evolve over the next two years.
11 Things IT Professionals Wish They Knew Earlier in Their Careers
Lisa Morgan, Freelance Writer,  4/6/2021
Time to Shift Your Job Search Out of Neutral
Jessica Davis, Senior Editor, Enterprise Apps,  3/31/2021
Does Identity Hinder Hybrid-Cloud and Multi-Cloud Adoption?
Joao-Pierre S. Ruth, Senior Writer,  4/1/2021
Register for InformationWeek Newsletters
Current Issue
Successful Strategies for Digital Transformation
Download this report to learn about the latest technologies and best practices or ensuring a successful transition from outdated business transformation tactics.
White Papers
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll