WASHINGTON — U.S. consumer spending cooled off at the start of 2011 despite tax cuts meant to spur an economy fighting high joblessness.
Consumer spending increased by 0.2 percent in January, less than in December, the Commerce Department reported today. The saving rate rose in January, to 5.8 percent from 5.4 percent the month before, a sign of caution among consumers.
Economists surveyed by Dow Jones Newswires had estimated spending would climb by 0.4 percent and incomes by 0.4 percent in January.
The slowdown in spending came even though personal income rose by 1 percent, the largest gain since May 2009 as the federal government extended income tax cuts to fatten Americans’ paychecks and stimulate spending.
Dan Greenhaus, a Miller Tabak analyst, said the data could cause other economists to lower their sights on gross domestic product for the first quarter. GDP is the broad measure of U.S. economic activity.
“The consumer has gotten off to a slower start in 2011,” Greenhaus wrote. “We would not be surprised to see some of the more bullish forecasters taking down their estimates.”
