by Wolf Richter
Spending shifts slowly back to services. But spending on goods still massively above trend, despite supply shortages.
What happened is that income growth has been getting eaten up by inflation for months, but inflation-adjusted spending jumped by a huge and upwardly revised amount in January from December (+2.1%), and then dipped a little in February from that record (-0.4%), but was still the second highest ever, and up by a huge 6.9%, adjusted for inflation, from a year ago.
Inflation is a massive problem and is eating up the substantial growth in income. But for now, consumers are still making heroic efforts to out-spend inflation, with many of them spending money they’d extracted from their homes through cash-out refis, brokerage accounts, and from other assets they could leverage, and from running up their credit card balances.