US household incomes rose 10% in January as the government paid incentives to households and consumer spending rose 2.4%, causing the economy to explode this year.
The increase in revenue was the second largest, overshadowed only by the rise in April last year, when the federal government sent an initial round of pandemic relief payments, the Commerce Department said Friday. The increase in consumer spending in January was the first in October.
Under a $ 900 billion stimulus program signed by former President Donald Trump in late December, the federal government sent $ 600 in single payments to most households. He also paid unemployed workers $ 300 a week in addition to their normal unemployment benefits. Meanwhile, job growth resumed in January, after declining in December. And higher-income households, unable to travel or eat, have accumulated a high level of savings.
“This combo will be strong enough to drive consumer spending this year,” said Lydia Boussour, a senior economist at Oxford Economics. She and her colleagues project that by this summer, US production will fully recover from last year’s pandemic recession, mainly due to rising consumer spending.
Oxford Economics predicts production will increase by 7% this year, which would be the strongest growth in decades. In a poll conducted by the Wall Street Journal earlier this month, economists expected gross domestic product to grow by almost 4.9% this year.