Soaring coronavirus crops, rising prices and a drop in government aid combined to cut Americans’ incomes in January.
After-tax income increased only 0.1% last month, Ministry of Commerce say friday. That was the slowest growth since June. Adjusted for inflation, after-tax earnings fell 0.5 percent, the sixth straight monthly decline.
The results were hit by a spike in coronavirus cases linked to the Omicron variant, which sent millions of employees off work in January. Previous data from the Ministry of Labor shows that total hours worked fell at the beginning of the month, although employment continued to increase.
January was also the first month since mid-2021 that parents did not receive payments under the extended child tax credit, which expired at the end of last year. Income from government programs fell 1.3% last month.
Yet despite falling incomes, Americans continue to spend. Consumer spending rose 2.1% in January. Even after adjusting for inflation, spending rose 1.5%.
Spending on goods has been particularly strong, continuing the pandemic-era pattern that has put pressure on global supply chains. However, spending on services also increased slightly, suggesting that the Omicron wave has not deflected the economy’s recovery in services.
https://www.nytimes.com/2022/02/25/business/economy/income-spending-january.html Recession, inflation and the loss of aid hit Americans’ incomes in January.